Example unlisted public financial statements

Transcription

1 Example unlisted public financial statements Grant Thornton CLEARR Example Ltd

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3 Example unlisted public financial statements i Foreword Welcome to the June 2015 edition of the Example Financial Statements. The preparation of financial statements in accordance with Australian Accounting Standards (AASBs) and International Financial Reporting Standards (IFRSs) is challenging. Each year new standards and amendments are published by the Australian Accounting Standards Board and the International Accounting Standards Board with the potential to significantly impact both the presentation of the primary financial statements and the accompanying disclosures. While the annual (and interim) period ending 30 June 2015 represents relatively little change for forprofit entities, this is not the case for not-for-profit entities as it is the first annual reporting period to which the new requirements in AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 12 Disclosure of Interests in Other Entities apply to not-for-profit entities with a June financial year end. Accordingly, this reporting season is likely to pose significant challenges to preparers and auditors in the not-for-profit sector. On a positive note, there are no major IFRSs / AASBs due for implementation over the next twelve months, however entities should start their impact assessment of recently issued AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (2014) sooner rather than later so as to prepare themselves properly for the changes that may be required when adopting these standards on 1 January 2017 and 1 January 2018 (respectively). Should preparers like to discuss these financial reporting changes or recent developments and how these may impact upon your business, please contact your local Grant Thornton Australia contact, or the National Audit Support (NAS) Team on nationalaudit.support@au.gt.com. There are also various publications (Technical Accounting Alerts [TA Alerts] and IFRS Quarterly Newsletters [IFRS News]) on our website which provide an overview of these developments. The June 2015 edition of Example Financial Statements is based on the recent Grant Thornton International publication, however has been tailored to suit the Australian financial reporting and regulatory environment. This publication is intended to illustrate the look and feel of Australian general purpose financial statements and to provide a realistic example of their presentation.

4 Example unlisted public financial statements ii This publication is based on the activities and results of Grant Thornton CLEARR Example Ltd and Subsidiaries ( the Group ), which is a fictional unlisted public IT entity that has been preparing Australian general purpose financial statements for several years. The form and content of Australian general purpose financial statements depend of course on the activities and transactions of each reporting entity. Our objective in preparing Example Financial Statements is to illustrate one possible approach to financial reporting by an Entity engaging in transactions that are typical across a range of non-specialist sectors. However, as with any example, this illustration does not envisage every possible transaction and cannot therefore be regarded as comprehensive. Management is responsible for the fair presentation of financial statements and therefore may find other approaches more appropriate in their specific circumstances. These Example Financial Statements have been reviewed and updated to reflect changes in Australian Accounting Standards that are effective for the year ending 30 June However, no account has been taken of any new developments published after 20 April The Grant Thornton website contains any updates that are relevant for 30 June 2015 financial statements, including our Technical Accounting Alert on June 2015 Accounting Standards issued by the AASB / IASB but not yet effective. Using this Publication In some areas alternative presentation and disclosure approaches are also illustrated in the Appendices. For further guidance on the Standards and Interpretations applied, reference is made to Australian Accounting Standards and Interpretations sources throughout the document on the left hand side of each page. The use of this publication is not a substitute for the use of a comprehensive and up-to-date disclosure checklist to ensure completeness of the disclosures in Australian general purpose financial statements. Andrew Archer National Audit Leader Grant Thornton Australia Limited April 2015

5 Example unlisted public financial statements iii Contents Page Foreword i Directors Report 1 Auditor s Independence Declaration 8 Consolidated Statement of Profit or Loss and Other Comprehensive Income 10 Consolidated Statement of Financial Position 13 Consolidated Statement of Financial Position 14 Consolidated Statement of Financial Position 15 Statement of Changes in Equity 18 Consolidated Statement of Cash Flows 21 Notes to the Consolidated Financial Statements 22 1 Nature of operations 22 2 General information and statement of compliance 22 3 Changes in accounting policies 23 4 Summary of accounting policies 26 5 Revenue 43 6 Finance costs and finance income 44 7 Other financial items 44 8 Income tax expense 45 9 Assets and disposal groups classified as held for sale and discontinued operations Cash and cash equivalents Trade and other receivables Financial assets and liabilities Inventories Investments accounted for using the equity method Property, plant and equipment Investment property Deferred tax assets and liabilities Goodwill Other intangible assets Trade and other payables 63

6 Example unlisted public financial statements iv 21 Provisions Employee remuneration Other liabilities Equity Dividends Reconciliation of cash flows from operating activities Auditor remuneration Related party transactions Contingent liabilities Capital commitments Acquisitions and disposals Interests in subsidiaries Leases Financial instrument risk Fair value measurement Capital management policies and procedures Parent Entity information Post-reporting date events 94 Directors Declaration 95 Independent Auditor s Report 96

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8 Example unlisted public financial statements 1 Directors Report The Directors of Grant Thornton CLEARR Example Ltd ( Grant Thornton CLEARR ) present their Report together with the financial statements of the Consolidated Entity, being Grant Thornton CLEARR ( the Company ) and its Controlled Entities ( the Group ) for the year ended 30 June 2015 and the Independent Audit Report thereon. CA 300(1)(c) Director details The following persons were Directors of Grant Thornton CLEARR during or since the end of the financial year. CA 300(10)(a) Mr Blake Smith B. Eng Managing Director Director since 2008 Blake has substantial knowledge of manufacturing processes and retail through executive roles in Australia, New Zealand and the UK where he has been responsible for implementing best practice systems across a range of industries. Ms Beth King CA, MBA Independent Non-Executive Director Audit and Risk Committee Chair and Member of the Nomination and Remuneration Committee Director since 2006 Beth is a Chartered Accountant and brings more than twenty (20) years broad financial and commercial experience, both local and international to Grant Thornton CLEARR. Mr Simon Murphy LLB (Hons) Independent Non-Executive Director Independent Chairman / Nomination and Remuneration Committee Chair and Member of Audit and Risk Committee Director since 2011 Simon has broad international corporate experience as Chief Executive Officer of an ASX Top 100 Company with extensive operations in North America and Europe and diverse trading relationships in Asia. Simon is a qualified lawyer in Australia. Mrs Alison French BA (Hons) Chief Executive Officer Director since 2010 Alison has significant international experience over twenty-five (25) years in the information technology sector, including senior executive positions based in Australia, New Zealand and Asia plus regional responsibilities over many years throughout Africa and the Middle East.

9 Example unlisted public financial statements 2 Mr William Middleton BEc, FCA Appointed 28 May 2015 Independent Non-Executive Director Member of the Nomination and Remuneration Committee and Member of Audit and Risk Committee William is the Principal of WM Associations, a financial consulting and advisory firm with a range of clients operating in the fast moving consumer goods industries. CA 300 (10)(d) CA 299(1)(c) Company Secretary Nick Morgan is a Chartered Accountant and the Group Chief Financial Officer. Nick has held senior positions with a number of professional accounting firms and has a degree in Commerce. Nick has been the Company Secretary of Grant Thornton CLEARR for four (4) years. Principal activities During the year, the principal activities of entities within the Group were: sale, customisation and integration of IT and telecommunications systems maintenance of IT and telecommunications systems internet based selling of hardware and software products There have been no significant changes in the nature of these activities during the year. CA 299(1)(a) Review of operations and financial results The Group is a key participant in the IT and telecommunications services market, holding a market share of approximately 35%. While the Group s Services and Retail segments have a diverse customer base, 12% of the Consulting segments revenue depended on a single customer (2014: 11%). In April 2015, the Group announced that it had been the target of an unsolicited takeover offer. The Directors believed that this offer significantly undervalued the Group. The offer caused some disruption, diverting management time from daily operations, and the Group incurred one-off costs of approximately $0.2m in relation to the offer. The offer has since been withdrawn. As part of our cost reduction program, it was necessary to reduce our service staff numbers this year from 75 to 60. Redundancy payments totalling $1.8m explain the higher employee benefit expenses this year. The operating result of the Group has increased to $15.4m (2014: $13.2m); this is mainly due to the cost control measures implemented during the year which have allowed increased revenue with a lower proportionate cost base.

10 Example unlisted public financial statements 3 Revenue from retail operations was up on last year (by 17%), which is very encouraging and higher than anticipated last year (our expectation was (12%). The key reason for this increase was the expansion of our distribution networks and upgrading of our online sales portal. Revenue growth in our Consulting and Service businesses was steady, which was in line with our expectations last year. This steady growth reflects the current global economic uncertainty and the cost reduction measures undertaken by businesses in the market place. Additional capital raising activities were undertaken during the year which raised $16.7m and allowed the Group to fund the Goodtech acquisition via a cash settlement as well as positioning the Group in a strong cash position for 2016 to allow for future acquisitions, if appropriate opportunities arise. The Group s net assets increased by 63% compared to the previous year, which is largely due to the Group s capital raising activities. The acquisitions and disposals which have occurred during the year are in line with the Group s strategy to increase online sales capacity. Goodwill of $2.4m arising on acquisition of Goodtech (as described below) is primarily related to growth expectations, expected future profitability, the substantial skill and expertise of Goodtech s workforce and expected cost synergies. The Chairman s report contains further information on the detailed operations of the Group during the year. CA 299(1)(b) Significant changes in the state of affairs During the year, the following changes occurred within the Group: acquisition of Goodtech Ltd: on 30 September 2014, the Group acquired 100% of the equity instruments of Goodtech Ltd ( Goodtech ), a Brisbane based business, thereby obtaining control. The acquisition was made to enhance the Group s position in the retail market for computer and telecommunications hardware in Australia. Goodtech is a significant business in Australia in the Group s targeted market. The cost of the acquisition was $16.06m which was settled in cash. disposal of Highstreet Limited: on 30 March 2015, the Group disposed of its 100% equity interest in its subsidiary, Highstreet Limited. The subsidiary was classified as held for sale in the 2013 financial statements. There was a loss on disposal of $29,000. issue of share capital: on 30 March 2015, the Group issued 1,500,000 shares as part of its capital raising program which resulted in proceeds of $16.7m, each share has the same terms and conditions as the existing ordinary shares.

11 Example unlisted public financial statements 4 CA 300(1)(a) CA 300(1)(b) CA 299(1)(d) Dividends In respect of the current year, a fully franked interim dividend of $3,000,000 (25 cents per share) was paid on 31 March 2015 (2014: $Nil). In addition to the interim dividend and since the end of the financial year, Directors have declared a fully franked final dividend of $6,885,000 (50 cents per share) to be paid on 15 October 2015 (2014: $Nil). Events arising since the end of the reporting period Apart from the final dividend declared, there are no other matters or circumstances that have arisen since the end of the year that has significantly affected or may significantly affect either: the Entity s operations in future financial years the results of those operations in future financial years; or the Entity s state of affairs in future financial years CA 299(1)(e) Likely developments Based on the expected growth in online sales, as predicted by a number of prominent economic commentators, and the demand from customers for the latest technology, we expect significant increase in online sales for next few years. We have a number of strategies to benefit from this growth, including: upgrading our online sales portal further expanding our distribution networks further reducing manufacturing costs; and a strong marketing campaign We have instigated an urgent upgrade of the Group s website and online sales portal. We have allocated $3.8m for this upgrade, which will mostly be funded from retained earnings. We expect the upgrade to be completed in the next twelve (12) months, to be followed by a strong marketing campaign. We are continually considering ways of reducing the Group s cost of manufacturing. The Directors are giving consideration to a major upgrade of production-line technology to improve efficiency. The Directors expect to receive the results of a feasibility study within the next six (6) months, and the various options will be considered at that time. Looking ahead, the Group is currently engaged in a competitive tender process to supply the Australian Government $100m IT and telecommunication systems and offer integration and maintenance services over the next ten (10) years. If successful, manufacture and supply are expected to commence next year, significantly affecting future revenues. Given both the competitive nature of the tender, and the fact that the process is ongoing, we have utilised the exemption in s299a(3) and have not disclosed further details about the possible impact of the potential contract on the Group s business strategy and future prospects. We are relying on the exemption on the basis that disclosure of the potential financial impact on the Group arising from the outcome of the tender process is premature, and would be likely to result in other tender competitors gaining a commercial advantage, which would jeopardise the Group s prospects.

12 Example unlisted public financial statements 5 The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group, and how the Group manages these risks include: reduction in demand from overseas markets given our reliance on the United Kingdom, USA and other overseas markets, this could have a significant impact on our financial results. Based on the views of prominent economic commentators, we do not anticipate any significant slowdown in these overseas economies for the next few years, but are currently investigating the option of expanding our sales into other emerging economies, such as China and India; and technological obsolescence given the rapidly changing environment in which the Group operates, this could have a very significant impact on our financial results. We address this risk through investment in research and development and by constantly monitoring the market. With competitors constantly seeking to enter our market with improved designs, we see this risk increasing in the future. CA 300 (10)(b) CA 300 (10)(c) Directors meetings The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director is as follows: Board Meetings Audit and Risk Committee Nomination and Remuneration Committee Board Member A B A B A B Blake Smith Beth King Simon Murphy Alison French William Middleton * - * There have been no meetings of the Nomination and Remuneration Committee since the date of William Middleton s appointment to the Committee. Where: column A: is the number of meetings the Director was entitled to attend column B: is the number of meetings the Director attended. CA 300 (1)(d) CA 300 (1)(e) Unissued shares under option Unissued ordinary shares of Grant Thornton CLEARR under option at the date of this report are: Date options granted Expiry date Exercise price of shares ($) Number under option 5 July July ,749 1 July June ,175 1 August June ,000 Total under option 219,924 All options expire on the earlier of their expiry date or termination of the employee s employment. These options were issued under either the Star or Stay Program (described in Note 22.2 to the financial statements) and have been allotted to individuals on condition that they serve specified time periods as an employee of the Group before becoming entitled to exercise the options. These options do not entitle the holder to participate in any share issue of the Company.

13 Example unlisted public financial statements 6 CA 300(1)(f) Shares issued during or since the end of the year as a result of exercise During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there were no amounts unpaid on the shares issued): Date options granted Issue price of shares ($) Number of shares issued 1 July ,000 CA 299 (1f) CA 300 (1g) Environmental legislation Grant Thornton CLEARR operations are not subject to any particular or significant environmental regulation under a law of the Commonwealth or of a State or Territory in Australia. Indemnities given to, and insurance premiums paid for, auditors and officers During the year, Grant Thornton CLEARR paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group. Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor. CA 300(14) / (15) ASIC CO 98/100 Proceedings of behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Rounding of amounts Grant Thornton CLEARR is a type of Company referred to in ASIC Class Order 98/100 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable), or in certain cases, to the nearest dollar under the option permitted in the Class Order.

14 Example unlisted public financial statements 7 CA 307C CA 298 (2a) Auditors Independence Declaration A copy of the Auditor s Independence Declaration as required under s.307c of the Corporations Act 2001 is included in page 8 of this financial report and forms part of this Director s Report. Signed in accordance with a resolution of the Directors. CA 298 (2c) CA 298 (2b) Blake Smith Director 28 August 2015

15 Example unlisted public financial statements 8 Auditor s Independence Declaration Grant Thornton Audit Pty Ltd ACN Level 17, 383 Kent Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230 T F E info.nsw@au.gt.com W Auditor's Independence Declaration To the Directors of Grant Thornton CLEARR Example Ltd In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Grant Thornton CLEARR Example Ltd for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been: a b No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; No contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants A B Partner Partner Audit & Assurance Sydney, 28 August 2015

16 Example unlisted public financial statements 9 Guidance Note: Consolidated Statement of Profit or Loss and Other Comprehensive Income AASB 101 Presentation of Financial Statements permits the statement of profit or loss and other comprehensive income to be presented: in a single statement of profit or loss and other comprehensive income; or in two statements: a statement of profit or loss and a statement of comprehensive income. The example financial statements illustrate a statement of profit or loss and other comprehensive income (ie a single statement). A two statement presentation is shown in Appendix B of our Example Listed Public Financial Statements. This statement of profit or loss and other comprehensive income format illustrates an example of the nature of expense method. See Appendix A of our Example Listed Public Financial Statements for a format illustrating the function of expense or cost of sales method. This statement of profit or loss and other comprehensive income presents an operating profit subtotal, which is commonly seen but is not required or defined in AASB s. Where this subtotal is provided, the figure disclosed should include items that would normally be considered to be operating. It is inappropriate to exclude items clearly related to operations (eg inventory writedowns and restructuring and relocation expenses) on the basis that they do not occur regularly or are unusual in amount (see AASB 101 Basis for Conclusions, paragraph 56). This statement of profit or loss and other comprehensive income includes an amount representing the Entity s share of profit from equity accounted investments. This amount represents profit after tax and non-controlling interest in those investments (as indicated in the Illustrative Financial Statement Structure in AASB 101). AASB 101 requires the Entity to disclose reclassification adjustments and related tax effects relating to components of other comprehensive income either on the face of the statement or in the notes. In this example, the Entity presents reclassification adjustments and current year gains and losses relating to other comprehensive income on the face of the statement of profit or loss and other comprehensive income (AASB ). An Entity may instead present reclassification adjustments in the notes, in which case the components of other comprehensive income are presented after any related reclassification adjustments (AASB ). According to AASB , an entity shall disclose the amount of income tax relating to each component of other comprehensive income either on the face of the statement of profit or loss and other comprehensive income or in the notes. In this example, the entity presents components of other comprehensive income before tax with one amount shown for the aggregate amount of income tax relating to all components of other comprehensive income (AASB (b)). Alternatively, the entity may present each component of other comprehensive income net of related tax effects (AASB (a)). If the tax effects of each component of other comprehensive income are not presented on the face of the statement, this information shall be presented in the notes (see Note 20).

17 Example unlisted public financial statements 10 Consolidated Statement of Profit or Loss and Other Comprehensive Income As of 30 June 2015 AASB (c) Notes AASB (d-e) $ 000 $ 000 AASB (a) Revenue 5 205, ,228 AASB Other income AASB Changes in inventories (7,923) (5,623) AASB Costs of material (42,434) (40,485) AASB Employee benefits expense 22 (113,809) (109,515) AASB Change in fair value of investment property AASB Depreciation of property, plant and equipment 15 (2,735) (3,575) AASB Amortisation of intangible assets 19 (3,528) (3,501) AASB Impairment of goodwill 18 (799) (190) AASB Impairment of other intangible assets 19 (870) - AASB Other expenses (12,878) (10,061) AASB (c) 21,554 19,094 Share of net profit from associates and joint ventures accounted for using the equity method AASB (b) Finance costs 6 (1,490) (1,876) AASB Finance income AASB Other financial items ,182 Profit before income tax 22,392 19,334 AASB (d) Income tax expense 8 (6,910) (5,763) Profit for the year from continuing operations 15,482 13,571 AASB (ea) Loss for the year from discontinued operations 9 (9) (325) AASB (f) Profit for the year 15,473 13,246 AASB (g) AASB A Other comprehensive income: Items that will not be reclassified subsequently to profit or loss AASB (f) revaluation of land AASB (c) re-measurement of net defined benefit liability 22 3,830 (3,541) AASB AASB A income tax on items that will not be reclassified to profit or loss 24 (1,240) 1,062 Items that may be reclassified subsequently to profit or loss Cash flow hedging: 12 AASB 7.23(c-d) current year gains / (losses) 367 (47) AASB reclassification to profit or loss 260 (425) This statement should be read in conjunction with the notes to the financial statements.

18 Example unlisted public financial statements 11 Consolidated Statement of Profit or Loss and Other Comprehensive Income As of 30 June 2015 Available-for-sale financial assets: 12 Notes $ 000 $ 000 AASB 7.20(a)(ii) current year gains / (losses) AASB reclassification to profit or loss (50) - AASB (b) Exchange differences on translating foreign operations (664) (341) AASB (h) Share of other comprehensive income of equity accounted investments 2 - AASB Income tax on items that may be reclassified to profit or loss Other comprehensive income for the period, net of income tax 3,097 (3,162) AASB (i) Total comprehensive income for the period 18,570 10,084 Profit for the year attributable to: AASB (a)(i) non-controlling interest AASB (a)(ii) owners of the Parent 15,352 13,130 Total comprehensive income attributable to: 15,473 13,246 AASB (b)(i) non-controlling interest AASB (b)(ii) owners of the Parent 18,449 9,968 AASB 5.33(d) Total comprehensive income attributable to owners of the Parent: 18,570 10,084 continuing operations 18,458 10,293 discontinued operations (9) (325) 18,449 9,968 This statement should be read in conjunction with the notes to the financial statements.

19 Example unlisted public financial statements 12 Guidance Note: Consolidated Statement of Financial Position The statement of financial position complies with AASB 101 Presentation of Financial Statements. If the entity: i ii iii Applies an accounting policy retrospectively Makes a retrospective restatement of items in its financial statements for correction of material errors; or Reclassifies items in the financial statements, the entity shall present a statement of financial position as at the beginning of the earliest comparative period, ie an extra comparative statement of financial position at, for example, 1 July 2013 (AASB (f) and AASB ). Grant Thornton CLEARR Example Ltd has included a third statement of financial position to reflect the Group s correction of a prior period error. The statement of financial position includes a current/non-current distinction. When presentation based on liquidity is reliable and more relevant, the entity can choose to present the statement of financial position in order of liquidity (AASB ). The entity will then not present a current / non-current distinction in the statement of financial position. However the disclosure requirements for amounts expected to be recovered or settled before or after twelve (12) months must still be applied (AASB ). These Example Financial Statements uses the terminology in AASB 101, however an entity may use other titles (eg balance sheet) for the primary financial statements (AASB ).

20 Example unlisted public financial statements 13 Consolidated Statement of Financial Position AASB (c) AASB , AASB As of 30 June 2015 Assets Current Notes July 2013 $'000 $'000 $'000 AASB (i) Cash and cash equivalents 10 34,729 11,197 9,987 AASB (h) Trade and other receivables 11 33,629 25,406 20,719 AASB (d) Other short-term financial assets AASB (g) Inventories 13 18,298 17,226 18,571 AASB Derivative financial instruments AASB (n) Current tax assets AASB (j) 87,893 55,027 50,398 Assets and disposal group classified as held for sale ,908 - AASB Total Current Assets 87,996 58,935 50,398 AASB , AASB AASB (e), AASB Non-Current Investments accounted for using the equity method AASB (a) Property, plant and equipment 15 22,199 20,397 20,746 AASB (b) Investment property 16 12,662 12,277 12,102 AASB (d) Other long-term financial assets 12 3,765 3,880 4,327 AASB (o), AASB Deferred tax assets AASB Goodwill 18 5,041 3,537 1,234 AASB (c) Other intangible assets 19 17,424 13,841 10,664 AASB Total Non-Current Assets 61,951 55,300 50,029 AASB Total Assets 149, , ,427 This statement should be read in conjunction with the notes to the financial statements.

21 Example unlisted public financial statements 14 Consolidated Statement of Financial Position As of 30 June 2015 Notes July 2013 AASB $'000 $'000 $'000 AASB (c-e) AASB , AASB Liabilities Current AASB (k) Trade and other payables 20 8,497 6,550 7,672 AASB (m) Borrowings 12 5,327 3,885 3,818 AASB (m) Derivative financial instruments AASB (l) Provisions 21 1,215 3,345 4,400 AASB Employee benefits 22 1,467 1,496 1,336 AASB (n) Current tax liabilities 3, AASB Other liabilities 23 2,758 3,475 2,832 22,332 18,911 20,266 AASB (p) Liabilities included in disposal group held for sale AASB Current Liabilities 22,332 19,360 20,266 AASB , AASB Non-Current AASB (k) Trade and other payables ,765 AASB (m) Borrowings 12 25,060 25,724 21,405 AASB Employee benefits 22 10,386 13,642 8,932 AASB (o), AASB Deferred tax liabilities 17 1, AASB Other liabilities 23 2,020 1,500 1,600 AASB Total Non-Current Liabilities 39,373 40,866 36,702 AASB Total Liabilities 61,705 60,226 56,968 AASB Net Assets 88,242 54,009 43,459 This statement should be read in conjunction with the notes to the financial statements.

22 Example unlisted public financial statements 15 Consolidated Statement of Financial Position As of 30 June 2015 Equity Equity attributable to owners of the Parent: Notes July 2013 $'000 $'000 $'000 AASB (r) share capital 33,415 15,050 15,050 AASB (r) share option reserve AASB other components of equity 24 2,440 (657) 2,505 AASB (r) retained earnings 50,910 35,558 25,428 87,529 50,417 42,983 AASB (q) Non-controlling interest AASB Total Equity 88,242 51,009 43,459 This statement should be read in conjunction with the notes to the financial statements.

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24 Example unlisted public financial statements 17 Guidance Note: Consolidated Statement of Changes in Equity Entities may present the required reconciliations for each component of Other Comprehensive Income ( OCI ) either: a b In the statement if changes in equity, or In the notes to the financial statements (AASB (d)(ii) and AASB a). These Example Financial Statements present the reconciliations for each component of Other Comprehensive Income in the notes to the financial statements (see Note 19.2). This reduces duplicated disclosures and presents a clearer picture of the overall changes in equity. AASB 2 Share-based Payment requires an Entity to recognise equity-settled share-based payment transactions as changes in equity but does not specify how this is presented, eg in a separate reserve within equity or within retained earnings. In our view, either approach would be allowed under AASBs. Share option reserve has been credited with an increase in equity in this example (see also Note 4.24).

25 Example unlisted public financial statements 18 Statement of Changes in Equity Notes Share capital Share option reserve Other components of equity Retained earnings Total attributable to owners of Parent Non-controlling interest Total equity AASB (d-e) $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 AASB (d) Balance at 1 July ,050-2,505 25,363 42, ,394 AASB (b) Adjustment on error correction AASB (d) Balance at 1 July 2013 (restated) 15,050-2,505 25,428 42, ,459 Employee share-based payment options AASB (d)(iii) Total Transactions with owners Reported profit for the year ,115 13, ,231 Adjustment on error correction AASB (d)(i) Restated profit for the year ,130 13, ,246 AASB A Other comprehensive income (3,162) - (3,162) - (3,162) Total comprehensive income - - (3,162) 13,130 9, ,084 AASB (d) Balance at 30 June 2014 (restated) 15, (657) 38,558 53, ,009 AASB (d) Balance at 1 July , (657) 38,558 53, ,009 Dividends (3,000) (3,000) - (3,000) Issue of share capital under share-based payment 24 1, ,685-1,685 Employee share-based payment options Issue of share capital 24 16, ,680-16,680 AASB (d)(iii) Total transactions with owners 18, (3,000) 15,663-15,663 AASB (d)(i) Profit for the year ,352 15, ,473 AASB (d)(ii) Other comprehensive income ,097-3,097-3,097 Total comprehensive income - - 3,097 15,352 18, ,570 AASB (d) Balance at 30 June , ,440 50,910 87, ,242 This statement should be read in conjunction with the notes to the financial statements.

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27 Example unlisted public financial statements 20 Comments: Consolidated Statement of Cash Flows This format illustrates the direct method of determining operating cash flows (AASB (a)). An entity may also determine the operating cash flows using the indirect method (AASB (b)).

28 Example unlisted public financial statements 21 Consolidated Statement of Cash Flows Notes AASB (c-e) $ 000 $ 000 AASB AASB Operating activities Receipts from customers 205, ,751 Payments to suppliers and employees (177,972) (166,020) Income taxes paid (1,948) (5,588) Net cash from continuing operations 25,989 20,143 Net cash (used in) / from discontinued operations 9 (22) 811 Net cash from operating activities 26 25,967 20,954 Investing activities Purchase of property, plant and equipment (76) (3,281) Proceeds from disposals of property, plant and equipment 86 - Purchase of other intangible assets (3,666) (3,235) Proceeds from disposals of other intangible assets AASB Acquisition of subsidiaries, net of cash 31 (15,491) (12,075) AASB Proceeds from sale of subsidiaries, net of cash 31 3,117 - Proceeds from disposals and redemptions of non-derivative financial assets AASB Interest received AASB Dividends received AASB Taxes paid (467) (140) AASB Net cash used in investing activities (14,531) (18,131) Financing activities Proceeds from bank loans 1,441 - Repayment of bank loans (3,778) (649) Proceeds from issue of share capital 18,365 - AASB Interest paid 6 (1,015) (985) AASB Dividends paid 25 (3,000) - Net cash from / (used in) financing activities 12,013 (1,634) AASB Net change in cash and cash equivalents 23,449 1,189 Cash and cash equivalents, beginning of year 11,219 9,987 AASB Exchange differences on cash and cash equivalents ,729 11,219 Included in disposal group 9 - (22) AASB Cash and cash equivalents, end of year 10 34,729 11,197 This statement should be read in conjunction with the notes to the financial statements.

29 Example unlisted public financial statements 22 Notes to the Consolidated Financial Statements AASB (a) AASB (b) AASB (b) 1 Nature of operations Grant Thornton CLEARR Example Ltd and subsidiaries ( the Group ) principal activities include the development, consulting, sale and service of customised IT and telecommunication systems. These activities are grouped into the following service lines: consulting: focused on the design and sale of phone and intranet based in-house applications; customisation and integration of IT and telecommunications systems service: provides after-sale service and maintenance of IT and telecommunication systems retail: involved in the on-line sales of hardware and software products of the Group s business partners AASB AASB AASB (b) AASB (a) AASB (c) AASB (c) AASB General information and statement of compliance The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Grant Thornton CLEARR Example Ltd is a for-profit entity for the purpose of preparing the financial statements. Grant Thornton CLEARR Example Ltd is the Group s Ultimate Parent Company. Grant Thornton CLEARR Example Ltd is a Public Company incorporated and domiciled in Australia. The address of its registered office and its principal place of business is 149a Great Place, Greatville, Australia. The consolidated financial statements for the year ended 30 June 2015 (including comparatives) were approved and authorised for issue by the Board of Directors on 28 August 2015.

30 Example unlisted public financial statements 23 AASB Changes in accounting policies 3.1 Correction of prior period error One of the subsidiaries undertook a review of its leasing arrangements during the year and found out that an equipment leasing contract had been incorrectly accounted for as a finance lease rather than as an operating lease. This error has been rectified by restating each of the affected financial statement line items for prior periods as follows: Statement of Financial Position (extract) 30 June June 2013 Previous Restated Previous Restated amount Adjustment amount amount Adjustment amount $000 $000 $000 $000 $000 $000 Property, plant and equipment 21,407 (650) 20,397 21,421 (675) 20,746 Deferred tax asset 955 (54) (43) 852 Current borrowings (3,498) 119 (3,379) (3,936) 118 (3,818) Non-current borrowings (21,930) 665 (21,265) (22,070) 665 (21,405) Net assets 53, ,009 43, ,459 Retained earnings (35,478) (80) (35,558) (25,363) (65) (25,428) Total equity (51,089) (80) (51,009) (43,394) (65) (43,459) Statement of Profit or Loss & Other Comprehensive Income (extract) 30 June 2014 Previous Restated amount Adjustment amount $000 $000 $000 Changes in inventories (5,637) (14) (5,623) Finance costs (1,914) 38 (1,876) Profit before income tax 19, ,334 Income tax expense (5,757) (6) (5,763) Loss from discontinued operation (325) - (325) Profit for the period 13, ,246 Other Comprehensive Income (3,162) - (3,162) Total comprehensive income for the period 10, ,084 Total comprehensive income attributable to: non-controlling interests owners of the Parent 9, ,968 10, ,084 AASB Changes in accounting estimates During the current reporting period, the Group changed the discount rate used in measuring its Australian Dollar dominated defined benefit obligations and other long term employee benefits from the Australian government bond rate to the high quality corporate bond rate. This change was necessitated by developments in the Australian business environment that confirmed there is a sufficiently observable, deep and liquid market in high quality Australian corporate bonds to satisfy the requirements in AASB 119 Employee Benefits 1. The Group concluded that this has resulted in a change in accounting estimate in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. 1 For more details on this development, refer to our Technical Accounting Alert TA Change in discount rates used for measuring employee benefits.

31 Example unlisted public financial statements 24 The Group has included $123,000 of actuarial gains directly arising from this change in the financial assumptions actuarial gains disclosed in Note 22. As the change in discount rate only occurred after the beginning of the annual reporting period, interest cost was unaffected during the current period. Nevertheless, the Group estimates the impact on interest costs during the next reporting period to be approximately $105,000 when the high quality corporate bond rate is applied to the opening net defined benefit asset in the next reporting period. The Group also reduced the carrying amounts of other long term employee benefits by $21,000 during the current reporting period as a result of this change in accounting estimate. The Group is not able to predict the impact of changing to high quality corporate bond rates in periods after the next reporting period due to the inherent uncertainty in measuring defined benefit obligations. AASB New and revised standards that are effective for these financial statements 2 A number of new and revised standards are effective for annual periods beginning on or after 1 January Information on these new standards is presented below. AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities AASB adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of currently has a legally enforceable right of set-off and that some gross settlement systems may be considered equivalent to net settlement. AASB is applicable to annual reporting periods beginning on or after 1 January The adoption of these amendments has not had a material impact on the Group as the amendments merely clarify the existing requirements in AASB 132. AASB Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarify the IASB s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. AASB makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to annual reporting periods beginning on or after 1 January The discussion of the initial application of AASBs / IFRSs needs to be disclosed only in the first financial statements after the new or revised requirements have been adopted by the entity.

32 Example unlisted public financial statements 25 The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. AASB Amendments to Australian Accounting Standards Investment Entities The amendments in AASB provide an exception to consolidation to investment entities and require them to measure unconsolidated subsidiaries at fair value through profit or loss in accordance with AASB 9 Financial Instruments (or AASB 139 Financial Instruments: Recognition and Measurement where AASB 9 has not yet been adopted). The amendments also introduce new disclosure requirements for investment entities that have subsidiaries. These amendments apply to investment entities, whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Examples of entities which might qualify as investment entities would include Australian superannuation entities, listed investment companies, pooled investment trusts and Federal, State and Territory fund management authorities. AASB is applicable to annual reporting periods beginning on or after 1 January This Standard has not had any impact on the Group as it does not meet the definition of an investment entity in order to apply this consolidation exception. AASB Amendments to Australian Accounting Standards (Part A: Annual Improvements and Cycles) Part A of AASB makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs Cycle and Annual Improvements to IFRSs Cycle. Among other improvements, the amendments arising from Annual Improvements to IFRSs Cycle: clarify that the definition of a related party includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity) amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria Among other improvements, the amendments arising from Annual Improvements to IFRSs Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination. Part A of AASB is applicable to annual reporting periods beginning on or after 1 July The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements.

33 Example unlisted public financial statements 26 AASB AASB AASB (b) AASB (b) AASB (a) AASB AASB 10.6 AASB 10.B92 AASB (b),(c) AASB 10.B86(c) 3.4 Accounting Standards issued but not yet effective and not been adopted early by the Group Refer to the latest Grant Thornton TA Alert on Accounting Standards issued but not yet effective, available on our website: ifrs/local-technical-and-financial-reporting-alerts/. 4 Summary of accounting policies 4.1 Overall considerations The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. The consolidated financial statements have been prepared using the measurement bases specified by Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. 4.2 Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. AASB 10.B88 AASB AASB 10.B94 AASB (a) AASB (b) Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. 4.3 Business combination The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

34 Example unlisted public financial statements 27 Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) fair value of consideration transferred; (b) the recognised amount of any non-controlling interest in the acquiree; and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately. AASB AASB AASB AASB Investments in associates and joint arrangements Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation. Investments in associates and joint ventures are accounted for using the equity method. Interests in joint operations are accounted for by recognising the Group s assets (including its share of any assets held jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation and its expenses (including its share of any expenses incurred jointly). Any goodwill or fair value adjustment attributable to the Group s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. AASB AASB (d) 4.5 Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional currency of the Parent Company. AASB (a) AASB (b) Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the respective Group Entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in profit or loss.

35 Example unlisted public financial statements 28 Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. Foreign operations In the Group s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the $AUD are translated into $AUD upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into $AUD at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into $AUD at the closing rate. Income and expenses have been translated into $AUD at the average rate 3 over the reporting period. Exchange differences are charged / credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal. AASB (a) 4.6 Revenue Revenue arises from the sale of goods and the rendering of services plus the Group s share of revenue of its joint ventures. It is measured by reference to the fair value of consideration received or receivable, excluding sales taxes, rebates, and trade discounts. The Group often enters into sales transactions involving a range of the Group s products and services, for example for the delivery of hardware, software and related after-sales service. The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales transaction in order to reflect the substance of the transaction. The consideration received from these multiple-component transactions are allocated to the separately identifiable component in proportion to its relative fair value. AASB (b) Sale of goods (hardware or software) Sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods. Revenue from the sale of goods with no significant service obligation is recognised on delivery. Where significant tailoring, modification or integration is required, revenue is recognised in the same way as construction contracts for telecommunication systems described below. When goods are sold together with customer loyalty incentives, the consideration receivable is allocated between the sale of goods and sale of incentives based on their fair values. Revenue from sales of incentives is recognised when they are redeemed by customers in exchange for products supplied by the Group. 3 Note that the use of average rates is appropriate only if rates do not fluctuate significantly (AASB ).

36 Example unlisted public financial statements 29 AASB (b) Rendering of services The Group generates revenues from after-sales service and maintenance, consulting, and construction contracts for telecommunication solutions. Consideration received for those services is initially deferred, included in other liabilities and is recognised as revenue in the period when the service is performed. In recognising after-sales service and maintenance revenues, the Group considers the nature of the services and the customer s use of the related products, based on historical experience. Revenue from consulting services is recognised when the services are provided by reference to the contract s stage of completion at the reporting date in the same way as construction contracts for telecommunication systems described below. The Group also earns rental income from operating leases of its investment properties (see Note 16). Rental income is recognised on a straight-line basis over the term of the lease. AASB (b) AASB (b) AASB (a) Construction contracts for telecommunication solutions Construction contracts for telecommunication systems specify a fixed price for the development and installation of IT and telecommunication systems. When the outcome can be assessed reliably, contract revenue and associated costs are recognised by reference to the stage of completion of the contract activity at the reporting date. Revenue is measured at the fair value of consideration received or receivable in relation to that activity. When the Group cannot measure the outcome of a contract reliably, revenue is recognised only to the extent of contract costs that have been incurred and are recoverable. Contract costs are recognised in the period in which they are incurred. In either situation, when it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in profit or loss. AASB (a) AASB (c) AASB A construction contract s stage of completion is assessed by management based on milestones (usually defined in the contract) for the activities to be carried out under the contract and other available relevant information at the reporting date. The maximum amount of revenue to be recognised for each milestone is determined by estimating relative contract fair values of each project phase, ie by comparing the Group s overall contract revenue with the expected profit for each corresponding milestone. Progress and related contract revenue in-between milestones is determined by comparing costs incurred to date with the total estimated costs estimated for that particular milestone (a procedure sometimes referred to as the cost-to-cost method). The gross amount due from customers for contract work is presented within trade and other receivables for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings. The gross amount due to customers for contract work is presented within other liabilities for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).

37 Example unlisted public financial statements 30 AASB AASB (b) AASB (b) AASB (b) AASB 5.32 Interest and dividend income Interest income and expenses are reported on an accrual basis using the effective interest method. Dividend income, other than those from investments in associates, are recognised at the time the right to receive payment is established. 4.7 Operating expenses Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. 4.8 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs (see Note 6). 4.9 Profit or loss from discontinued operations A discontinued operation is a component of the Entity that either has been disposed of, or is classified as held for sale, and: represents a separate major line of business or geographical area of operations is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to re-sale AASB 5.33 AASB 5.34 Profit or loss from discontinued operations, including prior year components of profit or loss, are presented in a single amount in the statement of profit or loss and other comprehensive income. This amount, which comprises the post-tax profit or loss of discontinued operations and the posttax gain or loss resulting from the measurement and disposal of assets classified as held for sale (see also Note 4.21), is further analysed in Note 9. The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date for the latest period presented Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. See Note 4.3 for information on how goodwill is initially determined. Goodwill is carried at cost less accumulated impairment losses. Refer to Note 4.14 for a description of impairment testing procedures. AASB (b) 4.11 Other intangible assets Recognition of other intangible assets Acquired intangible assets Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific software. Brand names and customer lists acquired in a business combination that qualify for separate recognition, are acknowledged as intangible assets at their fair values (see Note 4.3).

38 Example unlisted public financial statements 31 AASB Internally developed software Expenditure on the research phase of projects to develop new customised software for IT and telecommunication systems is recognised as an expense as incurred. Costs that are directly attributable to a project s development phase are recognised as intangible assets, provided they meet the following recognition requirements: the development costs can be measured reliably the project is technically and commercially feasible the Group intends to and has sufficient resources to complete the project the Group has the ability to use or sell the software; and the software will generate probable future economic benefits Development costs not meeting these criteria for capitalisation are expensed as incurred. Employee (excluding Directors) directly attributable costs include software incurred costs for development along with an appropriate portion of relevant overheads and borrowing costs. AASB (a) AASB (b) Subsequent measurement All intangible assets, including internally developed software, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described in Note The following useful lives are applied: software: 3-5 years brand names: years customer lists: 4-6 years Any capitalised internally developed software that is not yet complete is not amortised but is subject to impairment testing as described in Note AASB (d) AASB (b) Amortisation has been included within depreciation, amortisation and impairment of non-financial assets. Subsequent expenditures on the maintenance of computer software and brand names are expensed as incurred. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses. AASB (a) AASB (c) AASB (a) AASB (b) 4.12 Property, plant and equipment Land Land held for use in production or administration is stated at re-valued amounts. Re-valued amounts are fair market values based on appraisals prepared by external professional valuers once every two years or more frequently if market factors indicate a material change in fair value.

39 Example unlisted public financial statements 32 Any revaluation surplus arising upon appraisal of land is recognised in other comprehensive income and credited to the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss (see Note 4.14) has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluations of land are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings. AASB (b) AASB (a) AASB (a) As no finite useful life for land can be determined, related carrying amounts are not depreciated. Buildings, IT equipment and other equipment Buildings, IT equipment and other equipment (comprising fittings and furniture) are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group s management. Buildings and IT equipment also include leasehold property held under a finance lease (see Note 4.13). Buildings, IT equipment and other equipment are subsequently measured using the cost model, cost less subsequent depreciation and impairment losses. AASB (b) AASB (c) Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of buildings, IT equipment and other equipment. The following useful lives are applied: buildings: years IT equipment: 2-5 years other equipment: 3-12 years In the case of leasehold property, expected useful lives are determined by reference to comparable owned assets or over the term of the lease, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses. AASB (a) AASB (b) 4.13 Leased assets Finance leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

40 Example unlisted public financial statements 33 See Note 4.12 for the depreciation methods and useful lives for assets held under finance lease. The corresponding finance lease liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease. Operating leases All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. AASB (b) 4.14 Impairment testing of goodwill, other intangible assets and property, plant and equipment For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. AASB AASB (a) An impairment loss is recognised for the amount by which the asset s or cash-generating unit s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management s assessment of respective risk profiles, such as market and asset-specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit s recoverable amount exceeds its carrying amount Investment property Investment properties are properties held to earn rentals and/or for capital appreciation, and are accounted for using the fair value model.

41 Example unlisted public financial statements 34 AASB (a) AASB (d) AASB (e) AASB (b) Investment properties are re-valued annually and are included in the statement of financial position at their open market value. These values are supported by market evidence and are determined by external professional valuers with sufficient experience with respect to both the location and the nature of the investment property. Any gain or loss resulting from either a change in the fair value or the sale of an investment property is immediately recognised in profit or loss within change in fair value of investment property. Rental income and operating expenses from investment property are reported within revenue and other expenses respectively, and are recognised as described in Notes 4.6 and 4.7. AASB 7.21 AASB (b) AASB (a) AASB (b) AASB (a) 4.16 Financial instruments Recognition, initial measurement and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables financial assets at Fair Value Through Profit or Loss ( FVTPL ) Held-To-Maturity ( HTM ) investments Available-For-Sale ( AFS ) financial assets AASB 7.B5(f) All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. AASB (a) AASB (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group s trade and most other receivables fall into this category of financial instruments.

42 Example unlisted public financial statements 35 AASB 7.B5(f) AASB (a) AASB (b) AASB 7.B5(a) AASB 7.B5(e) AASB (a) AASB (b) AASB 7.B5(f) AASB (a) AASB (b) AASB 7.B5 (b) Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group. Financial assets at FVTPL Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below). Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. HTM investments HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturity other than loans and receivables. Investments are classified as HTM if the Group has the intention and ability to hold them until maturity. The Group currently holds listed bonds designated into this category. HTM investments are measured subsequently at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in profit or loss. AFS financial assets AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group s AFS financial assets include listed securities and debentures, and the equity investment in XY Ltd. The equity investment in XY Ltd is measured at cost less any impairment charges, as its fair value cannot currently be estimated reliably. Impairment charges are recognised in profit or loss. AASB (a) AASB (b) All other AFS financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the AFS reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance income (see Note 4.6).

43 Example unlisted public financial statements 36 Reversals of impairment losses for AFS debt securities are recognised in profit or loss if the reversal can be objectively related to an event occurring after the impairment loss was recognised. For AFS equity investments impairment reversals are not recognised in profit loss and any subsequent increase in fair value is recognised in Other Comprehensive Income ( OCI ). AASB (b) AASB (a) AASB (a) AASB 7.B5(a) AASB (b) AASB (b) AASB 7.22(a) AASB 7.22(c) AASB (a) AASB (b) Classification and subsequent measurement of financial liabilities The Group s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognised in profit or loss. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at FVTPL. The Group has designated some financial liabilities at FVTPL to reduce significant measurement inconsistencies between investment properties in the United States and related US-Dollar bank loans with fixed interest rates. These investment properties are measured using the fair value model (see Note 4.15), where changes in fair value of these assets are recognised in the profit or loss. The fair value of loans used to finance these assets correlates significantly with the valuation of the investment properties held by the Group, because both measures are highly reactive to the market interest rate for 30-year government bonds. The loans are managed and evaluated on a fair value basis through a quarterly management review in comparison with the property valuations. Therefore, the Group designates such fixed interest rate loans as at FVTPL if they are secured by specific investment property assets that are held by the Group. This accounting policy reduces significantly what would otherwise be an accounting mismatch. All interest-related charges and, if applicable, changes in an instrument s fair value that are reported in profit or loss are included within finance costs or finance income. Derivative financial instruments and hedge accounting Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow hedge relationships, which requires a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness. For the reporting periods under review, the Group has designated certain forward currency contracts as hedging instruments in cash flow hedge relationships. These arrangements have been entered into to mitigate currency exchange risk arising from certain legally binding sales and purchase orders denominated in foreign currency. All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position. To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.

44 Example unlisted public financial statements 37 At the time the hedged item affects profit or loss, any gain or loss previously recognised in Other Comprehensive Income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item. If a forecast transaction is no longer expected to occur any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs. AASB (a) AASB (a) AASB (a) AASB (b) 4.17 Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office ( ATO ) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. AASB (a) AASB Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Group s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.

45 Example unlisted public financial statements 38 Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. AASB (b) AASB AASB (a) AASB (b) Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other shortterm, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value Non-current assets and liabilities classified as held for sale and discontinued operations When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within twelve (12) months is highly probable, the asset or disposal group is classified as held for sale and presented separately in the statement of financial position. Liabilities are classified as held for sale and presented as such in the statement of financial position if they are directly associated with a disposal group. Assets classified as held for sale are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group s accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or amortisation. Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations (see Note 4.9). AASB (b) 4.21 Equity, reserves and dividend payments Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Other components of equity include the following: revaluation reserve comprises gains and losses from the revaluation of land (see Note 4.12) net defined benefit liability comprises the actuarial losses from changed in demographic and financial assumptions and the return on plan assets (see Note 4.23) foreign currency translation reserve comprises foreign currency translation differences arising on the translation of financial statements of the Group s foreign entities into $AUD (see Note 4.5) AFS financial assets and cash-flow hedge reserves comprises gains and losses relating to these types of financial instruments (see Note 4.16) Retained earnings include all current and prior period retained profits.

46 Example unlisted public financial statements 39 Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a General Meeting prior to the reporting date. All transactions with owners of the Parent are recorded separately within equity. AASB Employee benefits Short-term employee benefits Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. AASB 119.8, 155, 156 AASB (d) Other long-term employee benefits The Group s liabilities for annual leave and long service leave are included in other long term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds 4 (2014: government bonds) that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. Post-Employment Benefit Plans The Group provides post-employment benefits through defined benefit plans as well as various defined contribution plans. Defined Contribution Plans The Group pays fixed contributions into independent entities in relation to several State plans and insurance for individual employees. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that relevant employee services are received. Defined Benefit Plans ( DBP ) Under the Group s Defined Benefit Plans, the amount of pension benefit that an employee will receive on retirement is defined by reference to the employee s length of service and final salary. 4 There is a sufficiently observable, deep and liquid market in high quality Australian corporate bonds to satisfy the requirements in AASB 119 Employee Benefits according to a study undertaken by Milliman Australia which was commissioned to undertake this work by the Group of 100 (G100). All major accounting firms in Australia, including Grant Thornton, provided input to this research throughout the research and methodology development process. Accordingly, all entities, other than Not for Profit public sector entities, are now required to use corporate bond rates (rather than government bond rates) when measuring defined benefit obligations and other long-term employee benefits to ensure compliance with AASB Entities in the Not for Profit public sector will continue to use government bond rates as specifically required in paragraph Aus83.1 of AASB 119. For further information, refer to our TA Alert Change in discount rates used for measuring employee benefits.

47 Example unlisted public financial statements 40 The legal obligation for any benefits remains with the Group, even if plan assets for funding the Defined Benefit Plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies. The liability recognised in the statement of financial position for defined benefit plans is the present value of the Defined Benefit Obligation ( DBO ) at the reporting date less the fair value of plan assets. AASB (a) AASB (d) AASB AASB (b) AASB (a) Management estimates the DBO annually with the assistance of independent actuaries. This is based on standard rates of inflation, salary growth and mortality. Discount rates are determined by reference to market yields at the end of the reporting periods on high quality corporate bonds (2014: government bonds) that have terms to maturity approximating to the terms of the related pension liability. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised directly in other comprehensive income. They are included as a separate component of equity in the statement of financial position and in the statement of changes in equity. Service cost on the net defined benefit liability is included in employee benefits expense. Net interest expense on the net defined benefit liability is included in finance costs Share-based employee remuneration The Group operates equity-settled share-based remuneration plans for its employees. None of the Group s plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are allocated to share capital.

48 Example unlisted public financial statements 41 AASB (b) 4.24 Provisions, contingent liabilities and contingent assets Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan s main features to those affected by it. Provisions are not recognised for future operating losses. AASB (a) Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. AASB (a) Interpretation 1031 No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows. ASIC Class Order 98/100 AASB (e) AASB Rounding of amounts The Parent Entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors report have been rounded off to the nearest $1,000, or in certain cases, the nearest dollar Significant management judgement in applying accounting policies and estimation uncertainty When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Significant management judgement The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.

49 Example unlisted public financial statements 42 Recognition of service and construction contract revenue Determining when to recognise revenues from after-sales services requires an understanding of the customer s use of the related products, historical experience and knowledge of the market. Recognising construction contract revenue also requires significant judgment in determining milestones, actual work performed and the estimated costs to complete the work (see Note 4.6). Capitalisation of internally developed software Distinguishing the research and development phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired (see Note 4.11) Recognition of deferred tax assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see Note 4.18). Control assessment Refer to Note AASB Estimation uncertainty Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different. Impairment In assessing impairment, management estimates the recoverable amount of each asset or cashgenerating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 4.14). In 2015, the Group recognised an impairment loss on goodwill (see Note 18) and internally generated software (see Note 19). Useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and IT equipment. Inventories Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices. Business combinations Management uses valuation techniques in determining the fair values of the various elements of a business combination (see Note 4.3). Particularly, the fair value of contingent consideration is dependent on the outcome of many variables that affect future profitability (see Note 31.1).

50 Example unlisted public financial statements 43 Construction contract revenue Recognised amounts of construction contract revenues and related receivables reflect management s best estimate of each contract s outcome and stage of completion. This includes the assessment of the profitability of ongoing construction contracts and the order backlog. For more complex contracts in particular, costs to complete and contract profitability are subject to significant estimation uncertainty (see Note 4.6). Defined Benefit Liability ( DBO ) Management s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Estimation uncertainties exist particularly with regard to the assumed medical cost trends. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses (as analysed in Note 22.3). Fair value of financial instruments Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm s length transaction at the reporting date (see Note 35). 5 Revenue The Group s revenue is analysed as follows for each major product and service category (excluding revenue from discontinued operations): AASB (b) $ 000 $ 000 Sale of hardware 47,585 39,145 Sale of software 24,513 20,165 Other 3,679 3,756 AASB (b)(i) Sale of goods 75,777 63,066 After-sales service and maintenance 18,140 17,832 Consulting 59,837 60,116 AASB (a) Construction contracts for telecommunications solutions 50,973 49,186 Other revenue 1,066 1,028 AASB (b)(ii) Rendering of services 130, ,162 Group revenue 205, ,228

51 Example unlisted public financial statements 44 6 Finance costs and finance income Finance costs for the reporting periods consist of the following: AASB 7.20(b) Interest expenses for borrowings at amortised cost $ 000 $ 000 Subordinated shareholder loan Other borrowings at amortised cost Interest expenses for finance lease arrangements AASB 7.20(b) Total interest expenses for financial liabilities not at FVTPL 1, AASB (a) Less: interest expenses capitalised into intangible assets (80) (78) AASB A(g)(ii) Defined benefit obligation interest expenses AASB 7.20(a)(i) Unwinding of discount relating to contingent consideration liability 20 - Loss on foreign currency financial liabilities designated at fair value through profit or loss AASB 7.20(a) Impairment of investment in XY Ltd (AFS) ,490 1,876 AASB (b) AASB 7.B5(e) AASB 7.20(e) Interest expenses capitalised into intangible assets were capitalised at a rate of 4.4% per annum (2014: 4.5%) The loss on foreign currency financial liabilities designated at FVTPL takes account of interest payments on these loans. An impairment loss was recognised in 2014 for the investment in XY Ltd, which is carried at cost less impairment charges as its fair value cannot be measured reliably (see Note 12.3). Finance income for the reporting periods consists of the following: AASB 7.20(b) $ 000 $ 000 Interest income from cash and cash equivalents Interest income on financial assets carried at amortised cost and AFS financial assets AASB 7.20(b) Total interest income for financial assets not at FVTPL AASB (b)(v) Dividend income from XY Ltd (AFS) 40 - AASB (b)(v) Dividend income from AFS listed securities AASB 7.20(a)(i) Fair value gains on forward exchange contracts held for trading AASB 7.20 (a)(ii) Gains on AFS financial asses reclassified from other comprehensive income Other financial items Other financial items consist of the following: AASB 7.20(a)(i) AASB (a) $ 000 $ 000 Gain / (loss) from financial assets at fair value through profit and loss classified as held-for-trading 6 18 AASB 7.20(a)(iv) Gain / (loss) from exchange differences on loans and receivables 937 1, ,182

52 Example unlisted public financial statements 45 8 Income tax expense The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of Grant Thornton CLEARR at 30% (2014: 30%) and the reported tax expense in profit or loss are as follows 5 : AASB (c)(i) $ 000 $ 000 Profit before tax 22,392 19,334 AASB Domestic tax rate for Grant Thornton CLEARR Example Ltd 30% 30% Expected tax expense 6,718 5,900 AASB Adjustment for tax-rate differences in foreign jurisdictions AASB AASB AASB , AASB Adjustment for tax-exempt income: relating to equity accounted investments (18) (4) other tax-exempt income (63) (117) Adjustment for non-deductible expenses: relating to goodwill impairment other non-deductible expenses 17 9 Actual tax expense / (income) 6,910 5,763 Tax expense comprises: AASB (a) current tax expense 5,798 5,164 Deferred tax expense / (income): AASB (c) origination and reversal of temporary differences 1, AASB utilisation of unused tax losses AASB (ab) Tax expense 6,910 5,763 Deferred tax expense / (income), recognised directly in other comprehensive income (1,064) (1,157) Note 17 provides information on deferred tax assets and liabilities. Note 24.2 provides information on deferred income tax recognised directly in each component of other comprehensive income. AASB 5.41(a)-(d) AASB (a) 9 Assets and disposal groups classified as held for sale and discontinued operations At the end of 2014, management decided to discontinue in-store sale of IT and telecommunications hardware. This decision was taken in line with the Group s strategy to focus on its online retail business. Consequently, assets and liabilities allocable to Highstreet Ltd and subsidiaries (included in the retail segment) were classified as a disposal group. Revenue and expenses, gains and losses relating to the discontinuation of this subgroup have been eliminated from profit or loss from the Group s continuing operations and are shown as a single line item on the face of the statement of profit or loss and other comprehensive income (see loss for the year from discontinued operations). On 30 March 2015, Highstreet Ltd and subsidiaries were sold for a total of $3,117,000 in cash resulting in a loss of $29,000 before tax primarily due to related selling costs (see Note 31.3). 5 Examples of major components of tax expense are included in AASB

53 Example unlisted public financial statements 46 Operating profit of Highstreet Ltd and subsidiaries until the date of disposal and the profit or loss from re-measurement and disposal of assets and liabilities classified as held for sale is summarised as follows: $ 000 $ 000 AASB 5.33(b)(i) Revenue 9,803 11,015 Costs of material (3,540) (3,633) Employee benefits expense (6,100) (6,411) Depreciation and amortisation - (765) Other expenses (90) (100) Operating profit Finance costs (56) (60) Profit from discontinued operations before tax AASB 5.33(b)(ii), Tax expense (5) (14) also AASB (h) Profit for year Gain / (loss) on re-measurement and disposal: AASB 5.33(b)(iii) loss before tax on measurement to fair value less cost to sell - (510) loss before tax on disposal (29) - AASB 5.33(b)(iv), Tax income / (expense) Also AASB (h) Total gain / (loss) (21) (357) Loss for the year from discontinued operations (9) (325) AASB 5.41(b)-(d) AASB 5.38 Most of the assets and all of the liabilities have been disposed of in this transaction; however, the Group continues to own some former Highstreet storage facilities. Management expects to sell these remaining assets during The carrying amounts of assets and liabilities in this disposal group is summarised as follows: Non-current assets: $ 000 $ 000 property, plant and equipment 103 2,578 deferred tax Current assets: inventories - 1,081 cash and cash equivalents - 22 Assets classified as held for sale 103 3,908 Current liabilities: provisions - (245) trade and other payables - (190) current tax liabilities - (14) Liabilities classified as held for sale - (449)

54 Example unlisted public financial statements 47 AASB 5.33(c) Cash flows generated by Highstreet Ltd and subsidiaries for the reporting periods under review until the disposal are as follows: $ 000 $ 000 Operating activities (22) 811 Investing activities 3,117 - Cash flows from discontinued operations b 3, Cash flows from investing activities relate solely to the proceeds from the sale of Highstreet Ltd. AASB Cash and cash equivalents Cash and cash equivalents consist the following: Cash at bank and in hand: $ 000 $ 000 Australian Dollar ($AUD) 24,292 7,827 Great British Pound ( GBP) 2, American Dollar ($USD) 1, Short term deposits ($AUD) 6,958 2,247 Cash and cash equivalents 34,729 11,197 AASB AASB Following the acquisition of Goodtech some bank deposits of the acquiree were temporarily unavailable for general use by the Group due to legal restrictions. The amount of cash and cash equivalents inaccessible to the Group as at 30 June 2015 amounts to $500,000 (2014: $Nil). All restrictions on bank deposits were removed prior to approval of these consolidated financial statements on 28 August Trade and other receivables Trade and other receivables consist of the following: AASB AASB (b) $ 000 $ 000 Trade receivables, gross 31,265 23,889 Allowance credit losses (432) (560) Trade receivables 30,833 23,329 Receivables due from ABC Ltd Financial assets 30,945 23,441 Social security and other taxes 1, Construction contracts for telecommunication solutions 1, Prepayments Non-financial assets 2,684 2,965 33,629 25,406 AASB 7.25 AASB 7.29 AASB All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. The receivable due from ABC associates relates to the remaining consideration due on the sale of a former subsidiary in The carrying amount of the receivable is considered a reasonable approximation of fair value as this financial asset (which is measured at amortised cost) is expected to be paid within six (6) months, such that the time value of money is not significant.

55 Example unlisted public financial statements 48 AASB 7.37(b) AASB 7.16 All of the Group s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of $72,000 (2014: $514,000) has been recorded accordingly within other expenses. The impaired trade receivables are mostly due from customers in the business-to-business market that are experiencing financial difficulties. The movement in the allowance for credit losses can be reconciled as follows: Reconciliation of allowance credit losses $ 000 $ 000 AASB 7.16 Balance 1 July Amounts written off (uncollectable) (200) (66) Impairment loss Impairment loss reversed - - Balance 30 June An analysis of unimpaired trade receivables that are past due is given in Note AASB 7.36(d) AASB (a) AASB AASB The carrying amount of receivables whose terms have been renegotiated, that would otherwise be past due or impaired is $Nil (2014: $Nil) Construction contracts Revenue of $50,973,000 (2014: $49,186,000) relating to construction contracts for telecommunication solutions has been included in revenue for the current reporting period. The amounts recognised in the statement of financial position relate to construction contracts progress at the end of the reporting period. The amounts are calculated as the net amounts of costs incurred plus recognised profits, less recognised losses and progress billings. The carrying amounts of assets and liabilities are analysed as follows: AASB111.40(a) AASB (a) AASB (b) $ 000 $ 000 Aggregate amounts of costs incurred and recognised profits and losses for all contracts in progress 3,421 3,121 Less progress billing (2,335) (2,354) Recognised as: 1, due from customers for construction contract work, recognised in trade and other receivables 1, Due to customers for construction contract work, recognised in other liabilities AASB (b) AASB (c) Advances paid from customers for construction contracts related to work not yet performed have been recognised in other liabilities (see Note 23) and amount to $225,000 (2014: $220,000). Retentions on construction contracts included within trade and other receivables amount to $10,000 (2014: $Nil). Retentions will be received upon acceptance by the customer of the work performed.

56 Example unlisted public financial statements 49 AASB Financial assets and liabilities 12.1 Categories of financial assets and liabilities Note 4.16 provides a description of each category of financial assets and financial liabilities and the related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows: 30 June 2015 Financial assets Notes Assets at FVTOCI Assets at FVTPL Derivatives used for hedging Financial assets at amortised cost Total $ 000 $ 000 $ 000 $ 000 $ 000 AASB 7.8(b) Bonds HTM ,814 2,814 AASB 7.8(d) Other investments (a) Other long-term financial assets ,814 3,765 AASB 7.8(a)(ii) Other short-term financial assets AASB 7.8(a)(ii) Derivative financial instruments AASB 7.8(c) Trade and other receivables (b) ,945 30,945 AASB 7.8(c) Cash and cash equivalents ,729 34, ,488 70, June 2015 Financial liabilities Notes Derivatives used for hedging * Designated at FVTPL * Other liabilities at FVTPL * Other liabilities # Total $ 000 $ 000 $ 000 $ 000 $ 000 AASB 7.8(e)(i) Non-current borrowings ,700-17,360 25,060 AASB 7.8(e)(i), AASB 7.8(f) Current borrowings ,077 5,327 AASB 7.8(f) Trade and other payables ,497 8,497 AASB 7.7 Derivative financial instruments AASB 7.8(e)(ii) Contingent consideration * Carried at fair value # Carried at amortised cost - 7, ,934 39,504

57 Example unlisted public financial statements June 2014 Financial assets Notes Assets at FVTOCI Assets at FVTPL Derivatives used for hedging Financial assets at amortised cost Total $ 000 $ 000 $ 000 $ 000 $ 000 AASB 7.8(b) Bonds - HTM ,992 2,992 AASB 7.8(d) Other investments (a) Other long-term financial assets ,992 3,880 AASB 7.8(a)(ii) Other short-term financial assets AASB 7.8(a)(ii) Derivative financial instruments AASB 7.8(c) Trade and other receivables (b) ,441 23,441 AASB 7.8(c) Cash and cash equivalents ,197 11, ,630 39, June 2014 Financial liabilities Notes Derivatives used for hedging * Designated at FVTPL * Other liabilities # Total $ 000 $ 000 $ 000 $ 000 AASB 7.8(e)(i) Non-current borrowings ,965 17,759 25,724 AASB 7.8(e)(i), AASB 7.8(f) Current borrowings ,630 3,885 AASB 7.8(f) Trade and other payables ,550 6,550 AASB 7.7 Derivative financial instruments * Carried at fair value # Carried at amortised cost 160 8,220 27,939 36,319 AASB 7.33 A description of the Group s financial instrument risks, including risk management objectives and policies is given in Note 34. The methods used to measure financial assets and liabilities reported at fair value are described in Note 30.1.

58 Example unlisted public financial statements 51 AASB HTM investments HTM investments comprise public traded zero coupon and US straight bonds with fixed interest rates between 5.5% and 6.2%. They mature in 2017 and The carrying amounts (measured at amortised cost) and fair values of these bonds are as follows: Carrying amount at amortised cost: $ 000 $ 000 zero coupon bonds 1,110 1,189 US straight bonds 1,704 1,803 AASB 7.8(b) 2,814 2,992 Fair value: AASB 7.25 zero coupon bonds 1,190 1,186 US straight bonds 1,705 1,809 2,895 2,995 AASB Fair values of these bonds have been estimated by reference to quoted bid prices in active markets at the reporting date and are categorised within Level 1 of the fair value hierarchy. The fair value of the US straight bonds also reflects the US-dollar spot rate as at the reporting date AFS financial assets The details and carrying amounts of AFS financial assets are as follows: $ 000 $ 000 AASB 7.25 Listed equity securities AASB 7.25 Listed debentures Total AFS financial assets at fair value Investment in XY Ltd AASB 7.8(d) The equity securities and debentures are denominated in $AUD and are publicly traded in Australia. AASB 7.30(a)-(d) AASB 7.B5(a)(i) The investment in XY Ltd represents a 15% equity interest in an unlisted company, one of the Group s suppliers. XY Ltd has been undertaking a major restructuring process since 2014, which has triggered possible litigation by third parties. Due to these uncertainties, the fair value of the Group s investment in this Entity cannot be reliably measured. Therefore, it has been stated at cost less impairment charges. In 2014, an impairment charge of $350,000 was recognised within finance cost. The Group plans to continue to hold its investment in XY Ltd while it secures other supply lines Financial assets held for trading Financial assets held for trading consists of various investments in money market funds (presented as other short-term financial assets) that are held by the Group for short-term trading and certain derivative financial investments (see Note 12.5). All of these money market funds are publicly traded on stock exchanges in Australia.

59 Example unlisted public financial statements Derivative financial instruments The Group s derivative financial instruments are measured at fair value and are summarised below: $ 000 $ 000 AASB 7.22(b) US-Dollar forward contracts: cash flow hedge Other forward exchange contracts: held-for-trading Derivative financial assets AASB 7.22(b) US-Dollar forward contracts: cash flow hedge - (160) Derivative financial liabilities - (160) AASB 7.22(a) AASB 7.22(b) AASB 7.22(c) The Group uses forward foreign exchange contracts to mitigate exchange rate exposure arising from forecast sales in US dollars and other currencies. All US-Dollar forward exchange contracts have been designated as hedging instruments in cash flow hedges in accordance with AASB 139. Other forward exchange contracts are considered by management to be part of economic hedge arrangements but have not been formally designated. AASB 7.23(a) AASB 7.23(b) AASB 7.23(c) AASB 7.23(d) AASB 7.23(e) The Group s US-Dollar forward contracts relate to cash flows that have been forecasted for March - June All forecast transactions for which hedge accounting has been used are expected to occur. During 2015 a gain of $367,000 (2014: loss of $47,000) was recognised in other comprehensive income. The cumulative gain recorded in equity is $467,000 (2014: cumulative loss of $160,000). During 2015 a loss of $260,000 (2014: net gain of $425,000) was reclassified from equity into profit or loss within revenue Borrowings Borrowings include the following financial liabilities: AASB 7.8(e)(i) Designated at FVTPL: Current Non-current $ 000 $ 000 $ 000 $ 000 US-Dollar loans ,700 7,965 AASB 7.8(f) Carrying amount at amortised cost: 4,565 3, AASB 7.8(f) Other bank borrowings: non-convertible bond - - 8,300 8,300 subordinated shareholder loan - - 5,000 5,000 finance lease liabilities (Note 33) ,060 4,459 Fair value: 5,077 3,630 17,360 17,759 other bank borrowings 4,565 3, non-convertible bond - - 8,259 8,383 subordinated shareholder loan - - 4,975 5,050 finance lease liabilities ,608 5,114 5,077 3,630 17,842 18,547 AASB 7.25 Other than the US-Dollar loans, all borrowings are denominated in $AUD.

60 Example unlisted public financial statements 53 US-Dollar loans at FVTPL US-Dollar loans are designated at FVTPL to significantly reduce measurement inconsistencies (see Note 4.16). The interest rate is fixed at 4%. Movements in the carrying amount of these US-Dollar loans are presented below: $ 000 $ 000 Carrying amount 1 July 8,220 8,380 Repayments (300) (230) Change in fair values: AASB 7.10(a) Changes in credit risk - - Other market factors AASB 7.25 Carrying amount 30 June 7,950 8,220 AASB 7.10(a) AASB 7.11(a) AASB 7.10(b) The cumulative changes since the designation of these borrowings at FVTPL attributable to changes in credit risk are $Nil (2014: $Nil). The Group estimates the credit-risk related change in fair value on a residual basis, as the difference between fair value changes specifically attributable to the appropriate benchmark interest rates and the total change in fair value. At year-end the estimate shows an insignificant change attributable to credit risk. The total undiscounted amount repayable at maturity in respect of the loan, converted at year-end exchange rates is $7,755,000 (2014: $8,055,000), equivalent to a difference between the carrying amount and the amount repayable of $195,000 (2014: $165,000). The fair value of the loans is measured as described in Note AASB (a) AASB 7.29 AASB 7.31 AASB 13.93(d) AASB Borrowings at amortised cost Other bank borrowings are secured by land and buildings owned by the Group (see Note 15). Current interest rates are variable and average 4.0% (2014: 4.1%). The carrying amount of the other bank borrowings is considered to be a reasonable approximation of the fair value. The Group s non-convertible bond with a fixed interest rate of 5.0% matures on 20 November 2017 and is therefore classified as non-current. The estimated fair value of the non-convertible bond is categorised within Level 2 of the fair value hierarchy. The fair value estimate has been determined from the perspective of a market participant that holds these non-convertible bonds as assets at 30 June The $8,259 is estimated using a present value technique, by discounting the contractual cash flows using implied yields of non-convertible bonds of an Entity with a similar standing and marketability. The most significant input being the discount rate that reflects the credit risk of counterparties. AASB AASB 13.93(d) AASB The subordinated shareholder loan was provided by Grant Thornton CLEARR s main shareholder, LOM Investment Trust in It is perpetual and carries a fixed coupon of 4.0%. It is repayable only upon liquidation of Grant Thornton CLEARR. The estimated fair value of the subordinated shareholder loan is categorised within Level 3 of the fair value hierarchy. The fair value estimate has been determined using a present value technique. The $4,975 is estimated by discounting the contractual cash flows at 4.1%. The discount rate has been determined using the interest rate that the Entity would pay to unrelated party, at the reporting date, adjusted to reflect the subordination feature.

61 Example unlisted public financial statements 54 The most significant input is the discount rate of 4.1%. AASB Other financial instruments The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value: trade and other receivables cash and cash equivalents trade and other payables 13 Inventories Inventories consist of the following: AASB AASB (c) $ 000 $ 000 AASB102.36(b) Raw materials and consumables 7,737 7,907 Merchandise 10,651 9,319 18,298 17,226 AASB (d) AASB (e) In 2015, a total of $35,265,000 of inventories was included in profit and loss as an expense (2014: $32,907,000). This includes an amount of $361,000 resulting from write down of inventories (2014: $389,000). 14 Investments accounted for using the equity method $000 $000 Investment in joint venture Investment in associate AASB 12.21(a) 14.1 Investment in joint venture The Group has one material joint venture, Halftime Ltd ( Halftime ): Name of the Joint Venture Country of incorporation and principal place of business Principal activity Halftime Ltd United Kingdom Online sales of hardware and software products Proportion of ownership interests held by the Group 30 June June % 50% AASB 12.21(b)(i) AASB 12.21(b)(ii) AASB 12.B12-B13 The investment in Halftime is accounted for using the equity method in accordance with AASB 128. Summarised financial information for Halftime is set out below: $000 $000 Current assets (a) Non-current assets Total assets 1, Current liabilities (b) (160) (138) Non-current liabilities (c) (240) (298) Total liabilities (400) (436)

62 Example unlisted public financial statements $000 $000 (a) Includes cash and cash equivalents (b) Includes financial liabilities (excluding trade and other payables and provisions) (80) (c) Includes financial liabilities (excluding trade and other payables and provisions) (100) $000 $000 Revenue 1, Profit for the year Other comprehensive income for the year - - Total comprehensive income for the year Depreciation and amortisation Interest income 1 - Interest expenses 4 - Tax expense AASB 12.B14 A reconciliation of the above summarised financial information to the carrying amount of the investment in Halftime is set out below: $000 $000 Total net assets of Halftime Proportion of ownership interests held by the Group 50% 50% Carrying amount of the investment in Halftime AASB 12.B12(a) AASB 12.21(b)(iii) No dividends were received from Halftime during the years 2015 and Halftime is a Private Company; therefore no quoted market prices are available for its shares. AASB 12.21(c) AASB 12.B Investment in Joint Venture The Group has a 45% equity interest in Equipe and a 30% equity interest in Shopmore Ltd. Neither associate is individually material to the Group. Summarised aggregated financial information of the Group s share in these associates: $000 $000 Profit from continuing operations Other comprehensive income 2 - Total comprehensive income Aggregate carrying amount of the Group s interests in associates

63 Example unlisted public financial statements Property, plant and equipment Details of the Group s property, plant and equipment and their carrying amount are as follows: Land Buildings IT equipment Other equipment Total $ 000 $ 000 $ 000 $ 000 $ 000 Gross carrying amount AASB (d) Balance 1 July ,697 19,362 5,579 2,319 34,957 AASB (e)(i) Additions AASB (e)(iii) Acquisition through business combination 730 1,221 2, ,622 AASB (e)(ii) Disposals - (401) - - (401) AASB (e)(iv) Revaluation increase AASB (e)(viii) Net exchange differences (21) (81) (79) (54) (235) AASB (d) Balance 30 June ,709 20,177 7,806 2,630 39,322 Depreciation and impairment AASB (d) Balance 1 July (12,159) (1,503) (898) (14,560) AASB (e)(ii) Disposals AASB (e)(viii) Net exchange differences - (54) (53) (36) (143) AASB (e)(vii) Depreciation - (1,315) (890) (530) (2,735) AASB (d) Balance 30 June (13,213) (2,446) (1,464) (17,123) Carrying amount 30 June ,709 6,964 5,360 1,166 22,199 Land Buildings IT equipment Other equipment Total $ 000 $ 000 $ 000 $ 000 $ 000 Gross carrying amount AASB (d) Balance 1 July ,697 23,067 4, ,046 AASB (e)(i) Additions - 1,001 1, ,281 AASB (e)(iii) Acquisition through business combination - - 2, ,148 AASB (e)(ii) Held for sale or included in disposal group - (4,598) (2,422) (348) (7,368) AASB (e)(viii) Net exchange differences - (108) (15) (12) (135) AASB (d) Balance 30 June ,697 19,362 5,579 2,334 34,972 Depreciation and impairment AASB (d) Balance 1 July (12,944) (1,805) (551) (15,300) AASB (e)(viii) Net exchange differences - (72) (10) (8) (90) AASB (e)(ii) Held for sale or included in disposal group - 3, ,390 AASB116.73(e)(vii) Depreciation - (2,343) (678) (554) (3,575) AASB (d) Balance 30 June (12,159) (1,503) (913) (14,575) Carrying amount 30 June ,697 7,203 4,076 1,421 20,397 AASB (a) AASB (b) AASB (a) AASB (c) AASB (e) AASB (f) All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. Land and buildings have been pledged as security for the Group s other bank borrowings (see Note 12.6). The Group has a contractual commitment to acquire IT equipment of $1,304,000 payable in There were no other material contractual commitments to acquire property, plant and equipment at 30 June 2015 (2014: None). If the cost model had been used, the carrying amounts of the re-valued land, including the fair value adjustment upon acquisition of Goodtech, would be $7,421,000 (2014: $6,712,000). The re-valued amounts include a revaluation surplus of $1,288,000 before tax (2014: $985,000).

64 Example unlisted public financial statements Investment property Investment property includes real estate properties in Australia and in the United States, which are owned to earn rentals and capital appreciation. AASB (d) The fair values of investment properties were estimated using observable data on recent transactions and rental yields for similar properties. Changes to the carrying amounts are as follows: $ 000 AASB Carrying amount 1 July ,102 AASB (e) Net exchange differences 25 AASB (d) Net gain / (loss) from fair value adjustments 150 AASB Carrying amount 30 June ,277 Additions: AASB (b) through business combinations 75 AASB (e) net exchange differences 22 AASB (d) net gain / (loss) from fair value adjustments 288 AASB Carrying amount 30 June ,662 AASB (g) AASB (f) AASB (b) AASB (c) AASB (a) Investment properties valued at $8,327,000 are pledged as security for related borrowings. Investment properties are leased out on operating leases. Rental income amounts to $1,066,000 (2014: $1,028,000) included within revenue. Direct operating expenses of $213,000 (2014: $206,000) were reported within other expenses, of which $18,000 (2014: $12,000) was incurred on vacant properties that did not generate rental income. The lease contracts are all non-cancellable for eight (8) years from the commencement of the lease. Future minimum lease rentals are as follows: Minimum lease payments due Within 1 year 1 to 5 years After 5 years Total $ 000 $ 000 $ 000 $ 000 AASB (a) 30 June ,075 5,375 2,090 8, June ,030 5,150 1,978 8,158

65 Example unlisted public financial statements Deferred tax assets and liabilities Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows: AASB (g) Deferred tax liabilities / (assets) 1 July 2014 Recognised in OCI * Recognised in business combination Recognised in profit and loss 30 June 2015 $ 000 $ 000 $ 000 $ 000 $ 000 Non-current assets Other intangible assets 847 (63) ,258 Property, plant and equipment 2,130 (22) ,702 Other long term financial assets (95) (76) Investment property 1, ,007 Current assets Trade and other receivables (168) (130) Non-current liabilities Pension and other employee obligations Current liabilities Provisions (1,003) (364) Pension and other employee obligations (4,451) 1,149 - (188) (3,490) Unused tax losses (75) * Other Comprehensive Income (901) 1, ,112 1,907

66 Example unlisted public financial statements 59 AASB (g) Deferred tax liabilities / (assets) Non-current assets 1 July 2013 Recognised in OCI group business combination and loss 30 June 2014 * Included in disposal Recognised in Recognised in profit $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Other intangible assets 409 (27) Property, plant and equipment 1,528 (68) ,130 Other long term financial assets (95) (95) Investment property 1, ,914 Current assets Trade and other receivables (34) (134) (168) Non-current liabilities Pension and other employee obligations Current liabilities Provisions (1,320) (1,003) Pension and other employee obligations (2,996) (1,062) - - (393) (4,451) Unused tax losses (300) (75) (852) (1,157) (901) * Other Comprehensive Income The amounts recognised in Other Comprehensive Income relate to revaluation of land and exchange differences on translating foreign operations. See Note 24.2 for the amount of the income tax relating to these components of Other Comprehensive Income. AASB (f) AASB (e) A deferred tax liability of $1,000 (2014: $2,000) associated with an investment in a domestic subsidiary has not been recognised, as the Group controls the timing of the reversal and it is probable that the temporary difference will not reverse in the foreseeable future. The tax value is equivalent to a temporary difference of $3,000 (2014: $7,000). All deferred tax assets (including tax losses and other tax credits) have been recognised in the statement of financial position.

67 Example unlisted public financial statements 60 AASB 3.B67(d) 18 Goodwill The movements in the net carrying amount of goodwill are as follows: AASB 3.B67(d) Gross carrying amount $ 000 $ 000 AASB 3.B67(d)(i) Balance 1 July 3,727 1,234 AASB 3.B67(d)(ii) Acquired through business combination 2,438 2,569 AASB 3.B67(d)(vi) Net exchange difference (135) (76) AASB 3.B67(d)(viii) Balance 30 June 6,030 3,727 Accumulated impairment AASB 3.B67(d)(i) Balance 1 July (190) - AASB 3.B67(d)(v) Impairment loss recognised (799) (190) AASB 3.B67(d)(vi) Net exchange difference - - AASB 3.B67(d)(viii) Balance 30 June (989) (190) Carrying amount at 30 June 5,041 3,537 AASB Impairment testing For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units, which are the units expected to benefit from the synergies of the business combinations in which the goodwill arises $ 000 $ 000 AASB (a) Retail 4,796 2,493 Consulting 245 1,044 Goodwill allocation at 30 June 5,041 3,537 AASB (c) AASB (d) The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering a detailed three-year forecast, followed by an extrapolation of expected cash flows for the units remaining useful lives using the growth rates determined by management. The present value of the expected cash flows of each segment is determined by applying a suitable discount rate. AASB (d)(iv) Growth rates Discount rates AASB (d)(v) Retail 3.0% 3.0% 9.3% 9.5% Consulting 0.1% 0.5% 10.9% 10.1% Growth rates The growth rates reflect the long-term average growth rates for the product lines and industries of the segments (all publicly available). The growth rate for online retailing exceeds the overall longterm average growth rates for Australia because this sector is expected to continue to grow at aboveaverage rates for the foreseeable future. Discount rates The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each unit.

68 Example unlisted public financial statements 61 AASB (d)(i) AASB (d)(ii) AASB (a) AASB (d) AASB (d)(i) AASB (d)(ii) AASB (a) AASB (a) AASB (b) & (d)(i) Cash flow assumptions Retail segment Management s key assumptions include stable profit margins, based on past experience in this market. The Group s management believes that this is the best available input for forecasting this mature market. Cash flow projections reflect stable profit margins achieved immediately before the budget period. No expected efficiency improvements have been taken into account and prices and wages reflect publicly available forecasts of inflation for the industry. Consulting The forecast was adjusted in 2014 for the decline in consulting services related to conventional telecommunication solutions. The market shifted considerably towards internet and intranet based solutions during 2014 and continued in As a result, management expects lower growth and moderately declining profit margins for this segment. Impairment testing, taking into account these latest developments, resulted in the further reduction of goodwill in 2015 to its recoverable amount. See Note 19 for the related impairment of other intangible assets. The related goodwill impairment loss of $799,000 in 2014 (2014: $190,000) was included within impairment of non-financial assets. AASB (f) AASB Apart from the considerations described in determining the value-in-use of the cash-generating units described above, management is not currently aware of any other probable changes that would necessitate changes in its key estimates. However, the estimate of recoverable amount for the consulting unit is particularly sensitive to the discount rate. If the discount rate used is increased by 1%, a further impairment loss of $300,000 would have to be recognised, of which $245,000 would be written off against goodwill and $55,000 against property, plant and equipment.

69 Example unlisted public financial statements Other intangible assets Detail of the Group s other intangible assets and their carrying amounts are as follows: AASB Gross carrying amount Acquired software licenses Internally developed software Brand Customer names lists Total $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 July ,608 14, ,536 AASB (e)(i) Addition, separately acquired Addition, internally developed - 3, ,306 Acquisition through business combination 3, ,387 5,255 AASB (e)(ii) Disposals (1,159) (1,159) AASB (e)(vii) Net exchange differences (73) (54) - - (127) Balance at 30 June ,469 18, ,761 37,251 Amortisation and impairment Balance at 1 July 2014 (6.063) (9,381) (162) (89) (15,695) AASB (e)(vi) Amortisation (1,978) (1,315) (125) (110) (3,528) AASB (e)(iv) Impairment losses - (870) - - (870) AASB (e)(ii) Disposals AASB (e)(vii) Net exchange differences (48) (36) - - (84) AASB Balance at 30 June 2015 (7,739) (11,602) (287) (199) (19,827) Carrying amount 30 June ,730 6, ,562 17,424 Gross carrying amount Balance at 1 July ,672 14, ,272 AASB (e)(i) Addition, separately acquired 3, ,097 Addition, internally developed Acquisition through business combination 1, ,005 AASB (e)(vii) Net exchange differences (20) (22) (8) (4) (54) Balance at 30 June ,608 14, ,536 Amortisation and impairment Balance at 1 July 2013 (4,442) (8,166) - - (12,608) AASB (e)(vi) Amortisation (1,607) (1,201) (156) (87) (3,051) AASB (e)(vii) Net exchange differences (14) (14) (6) (2) (36) Balance at 30 June 2014 (6,063) (9,381) (162) (89) (15,695) Carrying amount 30 June ,545 5, ,841 AASB AASB (b) AASB (c)(i) AASB (c)(ii) AASB (a) AASB (e) AASB (g) Additions to internally developed software include capitalised borrowing costs of $80,000 (2014: $78,000). In addition, research and development costs of $1,690,000 (2014: $1,015,000) were recognised as other expenses. An impairment loss of $870,000 (2014: $Nil) was recognised for internally developed software used to provide certain after-sales and maintenance services within the consulting unit. The recoverable amount of the asset is its value-in-use, determined based on management s expectation that the market will shift considerably towards other alternative software products and will significantly reduce future revenues and profits in the next two to three years (see Note 18 for the growth and discount rates used). Should the shift in the market to other software products occur more rapidly, the carrying amount of the software of $100,000 (2014: $970,000) would be reduced to $Nil.

70 Example unlisted public financial statements 63 AASB (e) During the year, the Group entered into an agreement to acquire enterprise resource planning software, to support the planning and administration of the Group s operations. Minimum contractual commitments resulting from this agreement are $97,000 payable during No other material contractual commitments at 30 June 2015 (2014: None). 20 Trade and other payables Trade and other payables recognised consist of the following: Current $ 000 $ 000 Trade payables 7,843 6,472 Other payables Total trade and other payables 8,497 6,550 AASB 7.25 AASB 7.27(a) AASB 7.27(b) AASB 7.29 AASB All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable approximation of fair value. 21 Provisions All provisions are considered current. The carrying amounts and movements in the provisions account are as follows: Restructuring Other Total $ 000 $ 000 $ 000 AASB (a) Carrying amount 1 July ,110 1,235 3,345 AASB (b) Additional provisions - 1,570 1,570 AASB (c) Amount utilised (876) (2,211) (3,087) AASB (d) Reversals (510) (103) (613) AASB (a) Carrying amount 30 June ,215 Provisions recognised at acquisition date in a business combination are included in additions (see Note 31.1). Provisions classified as held for sale are included within amount utilised (see Note 9). AASB (a) AASB (b) AASB (c) AASB AASB (a) AASB (b) AASB (a) AASB (b) AASB (c) The provision for restructuring relates to the Phoenix Program, which was initiated in early 2013 and carried out predominantly in 2014 and The Group s management expects to settle the remaining termination remuneration for former employees and legal fees relating to the restructuring Program in The Group is not eligible for any reimbursement by third parties in this regard. The restructuring provision as at 30 June 2015 was reduced due to the outcome of several lawsuits brought against the Group during 2015 by former employees. Out of court settlements based on the outcome of earlier settlements are expected for most of the remaining claims. Other provisions relate to various legal and other claims by customers, such as for example warranties for which customers are covered for the cost of repairs.

71 Example unlisted public financial statements 64 AASB AASB AASB Usually, these claims are settled between three and eighteen months from initiation, depending on the procedures used for negotiating the claims. As the timing of settlement of these claims is to a large extent dependent on the pace of negotiation with various counterparties and legal authorities, the Group cannot reliably estimate the amounts that will eventually be paid in settlement after more than twelve (12) months from the reporting date. Therefore, the amount is classified as current. The majority of the other provisions recognised at 30 June 2015 related to claims initiated in 2014 that were settled during Management, on the advice of counsel, does not expect the outcome of any of the remaining cases will give rise to any significant loss beyond the amounts recognised at 30 June None of the provisions will be discussed here in further detail so as to not seriously prejudice the Group s position in the related disputes. 22 Employee remuneration 22.1 Employee benefits expense Expenses recognised for employee benefits are analysed below: $ 000 $ 000 AASB Wages, salaries 96,483 91,168 Social security costs 11,229 10,608 AASB 2.51(a) Share-based payments Pensions defined benefit plans 1,308 3,030 AASB Pensions defined contribution plans 4,491 4,243 Employee benefits expense 113, , Share-based employee remuneration As at 30 June 2015 the Group maintained two share-based payment schemes for employee remuneration, the Star Program and the Stay Program. Both Programs will be settled in equity. AASB 2.45(a) AASB 2.45(a) The Star Program is part of the remuneration package of the Group s senior management. Options under this Program will vest if certain conditions, as defined in the Program, are met. It is based on the performance of Grant Thornton CLEARR s shares compared to other companies in the Australian Securities Exchange within a specified period. In addition, participants in this Program have to be employed until the end of the agreed vesting period. Upon vesting, each option allows the holder to purchase one ordinary share at a discount of 20-25% of the market price determined at grant date. The Stay Program is part of the remuneration package of the Group s research and development and sales personnel. Options under this Program will vest if the participant remains employed for the agreed vesting period. The maximum term of the options granted under the Stay Program ends on 4 July Upon vesting, each option allows the holder to purchase one ordinary share at a discount of 15-20% of the market price determined at grant date.

72 Example unlisted public financial statements 65 AASB 2.45 (b) Share options and weighted average exercise prices are as follows for the reporting periods presented: Star Program Number of shares Weighted average exercise price ($) Stay Program Number of shares Weighted average exercise price ($) Outstanding at 1 July , , Granted Forfeited (513) 6.24 (1,012) 5.81 Exercised Expired Outstanding at 30 June , , Granted 100, Forfeited (312) 6.24 (3,489) 5.81 Exercised (270,000) Outstanding at 30 June , , Exercisable at 30 June Exercisable at 30 June , AASB 2.45(c) AASB 2.47(a)(i) The weighted average share price at the date of exercise was $11.19 (no exercises in 2013). The fair values of options granted were determined using a variation of the binomial option pricing model that takes into account factors specific to the share incentive plans, such as the vesting period. The performance condition related to the Star Program, being a market condition, has been incorporated into the measurement by means of actuarial modelling. The following principal assumptions were used in the valuation: Star Program Stay Program AASB 2.47 Grant date 1 July August July 2010 AASB 2.45(d) Vesting period ends 30 June July July 2015 Share price at date of grant Volatility 50.00% 50.00% 50.00% Option life 5 years 5 years 7 years Dividend yield 1.00% 1.00% 1.00% Risk free investment rate 4.00% 4.00% 4.00% Fair value at grant date Exercise price at date of grant Exercisable from 1 July August August 2015 Exercisable to 30 June June July 2017 Weighted average remaining contractual life 1 year 4 years 2 years AASB 2.47(a)(ii) AASB 2.47(a)(iii) AASB 2.51 The underlying expected volatility was determined by reference to historical data of the Company s shares over a period of time. No special features inherent to the options granted were incorporated into measurement of fair value. In total, $298,000 (2014: $466,000) of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss and credited to share option reserve.

73 Example unlisted public financial statements Employee benefits The liabilities recognised for employee benefits consist of the following amounts: 6 Non-current: $ 000 $ 000 defined benefit plans 10,386 13,642 Current: defined benefit plans 1,246 1,193 other short term employee obligations Current pension and other employee obligations 1,467 1,496 AASB AASB (a) The current portion of these liabilities represents the Group s obligations to its current and former employees that are expected to be settled during Defined Benefit Plan The Group has set up a partly funded pension scheme for mid to senior management, mainly in Australia, the UK and the US. The scheme is available to certain senior workers after completing five years service. According to the plan, a certain percentage of the current salary is converted into a pension component each year until retirement. Pensions under this scheme are paid out when a beneficiary has reached the age of 65. The pensionable salary is limited to $100,000 for a year. Eligible employees are required to contribute a stated percentage of pensionable salary. In Australia and the UK, the pension payments are linked to the Consumer Price Index ( CPI ), although certain limitations apply. AASB (a) The plan assets are managed by a pension fund that is legally separated from the Group. The Board of Trustees of the pension fund is required by its articles of association to act in the best interest of the fund and it is responsible for setting the investment policies. The Group has no representation on the Board of the fund. The plan exposes the Group to actuarial risks such as interest rate risk, investment risk, longevity risk and inflation risk. Interest rate risk The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields of high quality corporate bonds (2014: government bonds). The estimated term of the bonds is consistent with the estimated term of the Defined Benefit Obligation and it is denominated in $AUD. A decrease in market yield on high quality corporate bonds (2014: government bonds) will increase the Group s defined benefit liability, although it is expected that this would be offset partially by an increase in the fair value of certain of the plan assets. 6 In the statement of financial position, the current and non-current portion of the defined benefit obligation is presented separately to comply with AASB However, paragraph 118 of AASB 119 Employee Benefits does not specify whether this disaggregation is needed. Therefore, an entity is also allowed to present the obligation as non-current in its entirety.

74 Example unlisted public financial statements 67 Investment risk The plan assets at 30 June 2015 are predominantly real estate, equity and debt instruments. The fair value of the plan assets is exposed to the real estate market (in Australia and the US). The equity instruments are significantly weighted towards the finance and pharmaceuticals sectors in Australia. Longevity risk The Group is required to provide benefits for life for the members of the defined benefit liability. Increase in the life expectancy of the members, particularly in Australia and in the UK where the pension payments are linked to CPI, will increase the defined benefit liability. Inflation risk A significant proportion of the defined benefit liability is linked to inflation. An increase in the inflation rate will increase the Group s liability. A portion of the plan assets are inflation-linked debt securities which will mitigate some of the effects of inflation. A reconciliation of the Group s Defined Benefit Obligation ( DBO ) and plan assets to the amounts presented in the statement of financial position for each of the reporting periods is presented below: $ 000 $ 000 AASB Defined Benefit Obligations 53,874 47,410 Fair value of planned assets (42,242) (32,575) Classified as: 11,632 14,835 current liability 1,246 1,193 non-current liability 10,386 13,642 Defined Benefit Obligation ( DBO ) The details of the Group s DBO are as follows: $ 000 $ 000 AASB (a)(ii) Defined Benefit Obligation 1 July 47,410 38,889 AASB (a) Current service cost 1,308 1,530 AASB (b) Interest cost 2,488 2,267 AASB (f) Contributions by plan participants AASB (c)(ii) Re-measurement actuarial losses from changes in demographic assumptions 916 1,091 AASB (c)(iii) Re-measurement actuarial losses from changes in financial assumptions 2,345 2,670 AASB (g) Benefits paid (1,251) (1,187) AASB (d) Past service costs - 1,500 AASB (a)(ii) Defined Benefit Obligation 30 June 53,874 47,410 AASB (e) Thereof: unfunded - - partly or wholly funded 53,874 47,410

75 Example unlisted public financial statements 68 Plan assets The reconciliation of the balance of the assets held for the Group s defined benefit plan is presented below: $ 000 $ 000 AASB (a)(i) Fair value of plan assets 1 July 32,575 29,901 AASB (b) Interest income 1,983 1,718 AASB (c)(i) Return on plan assets (excluding amounts included in net interest) 7, AASB (f) Contributions by the Group 1,186 1,273 AASB (f) Contributions by beneficiaries Benefits paid (1,251) (1,187) AASB (a)(i) Fair value of plan assets 30 June 42,242 32,575 The actual return on plan assets was $9,074 in 2015 (2014: $1,938). Plan assets do not comprise any of the Group s own financial instruments or any assets used by Group companies. Plan assets can be broken down into the following major categories of investments: Total plan assets $ 000 $ 000 AASB (a) Cash and cash equivalents 3,442 2,075 AASB (b) AASB (c) AASB (d) Equity instruments: financial institutions 9,800 7,600 pharmaceuticals 8,100 4,300 oil and gas industry 1,600 1,700 manufacturing industry 1,500 1,200 Sub-total 21,000 14,800 Debt instruments: Australian government bonds 4,800 5,800 corporate bonds (rated AA and above) 3,100 5,600 Sub-total 7,900 11,400 Real estate: in Australia 6,700 2,500 in the US 3,200 1,800 Sub-total 9,900 4,300 Total 42,242 32,575 AASB All equity and debt instruments have quoted prices in active markets (Level 1). Fair values of real estate investments do not have quoted prices and have been determined based on professional appraisals that would be classified as Level 3 of the fair value hierarchy as defined in AASB 13 Fair Value Measurement.

76 Example unlisted public financial statements 69 AASB (a) The Defined Benefit Obligation and plan assets are composed by geographical locations as follows: Australia UK US Others Total $ 000 $ 000 $ 000 $ 000 $ 000 Defined Benefit Obligation 24,482 17,321 11, ,874 Fair value of plan assets (18,586) (13,057) (10,427) (172) (42,242) 5,896 4,264 1, ,632 Australia UK US Others Total $ 000 $ 000 $ 000 $ 000 $ 000 Defined Benefit Obligation 21,594 15,063 10, ,410 Fair value of plan assets (14,123) (9,748) (8,553) (151) (32,575) 7,471 5,315 1, ,835 AASB The significant actuarial assumptions used for the valuation are as follows: Discount rate at 30 June 5.3% 5.5% Salary growth rate 3.0% 3.2% Average life expectancies: male, 45 years of age at reporting date female, 45 years of age at reporting date male, 65 years of age at reporting date female, 65 years of age at reporting date AASB (a) AASB (b) AASB AASB These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to high quality corporate bonds (2014: government bonds) that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension obligation. Other assumptions are based on management s historical experience. The present value of the DBO was measured using the projected unit credit method. Defined Benefit Plan expenses Amounts recognised in profit or loss, that are related to the Group s Defined Benefit Plans are as follows: $ 000 $ 000 AASB (a) Current service cost 1,308 1,530 AASB (a) Past service cost - 1,500 AASB (b) Net interest expense Total expenses recognised in profit or loss 1,813 3,579 AASB The current service cost and the past service cost are included in employee benefits expense. The net interest expense is included in finance costs. 7 For the purposes of these Example Financial Statements, it is assumed that the significant actuarial assumptions for the different geographical locations are the same. In practice, it is likely that there will be differences in the significant actuarial assumptions in different geographical locations, which will require their disclosure.

77 Example unlisted public financial statements 70 AASB Amounts recognised in other comprehensive income related to the Group s defined benefit plans are as follows: $ 000 $ 000 AASB (a) Actuarial losses from changes in demographic assumptions (916) (1,091) AASB (a) Actuarial losses from changes in financial assumptions (2,345) (2,670) AASB (b) Return on plan assets (excluding amounts included in net interest) 7, Total income / (expenses) recognised in other comprehensive income 3,830 (3,541) AASB All the expenses summarised above were included within items that will not be reclassified subsequently to profit or loss in the statement of other comprehensive income. AASB (a) AASB (b) AASB (c) AASB AASB (b) Other Defined Benefit Plan information Employees of the Group are required to contribute a fixed 5% of the pensionable salary. The remaining contribution is partly funded by the Group s subsidiaries. The funding requirements are based on the pension fund s actuarial measurement framework as set out in the funding policies. Based on historical data, the Group expects contributions of $2,500,000 to be paid for The weighted average duration of the defined benefit obligation at 30 June 2015 is 23.3 years (2014: 23.2 years). The significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, the salary growth rate and the average life expectancy. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability at 30 June 2015: AASB (a) Changes in the significant actuarial assumptions Discount rate Increase to 6.3% Decrease to 4.3% Increase / (decrease) in the defined benefit liability (2,000) 2,100 Salary growth rate Increase to 4.0% Decrease to 2.0% Increase / (decrease) in the defined benefit liability 950 (780) Average life expectancies of males Increase of one year Decrease of one year Increase / (decrease) in the defined benefit liability 1,140 (930) Average life expectancies of females Increase of one year Decrease of one year Increase / (decrease) in the defined benefit liability 1,280 (1,090) AASB (b) The present value of the defined benefit obligation calculated with the same method (project unit credit) as the defined benefit obligation recognised in the statement of financial position. The sensitivity analyses are based on a change in one assumption while not changing all other assumptions. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.

78 Example unlisted public financial statements Other liabilities Other liabilities consist of the following: $ 000 $ 000 Due to customers for construction contract work Advances received for construction contract work Deferred service income 2,123 2,291 Other Deferred gain Other liabilities - current 2,758 3,475 Contingent consideration for the acquisition of Goodtech Deferred gain 1,400 1,500 Other liabilities - non-current 2,020 1,500 The deferred gain relates to a sale and leaseback of an office and production building in The excess of proceeds received over fair value was deferred and is being amortised over the lease term of fifteen (15) years. In 2015, deferred income of $100,000 (2014: $100,000) was recognised in profit or loss relating to this transaction. The subsequent leasing agreement is treated as an operating lease (see Note 33.2). The non-current part of the deferred gain will be amortised between 2016 and the end of the lease term. AASB AASB All amounts recognised relating to deferred service income are considered current as the timing of service commitments is not at the discretion of the Group. Assuming an average remaining term of service on service contracts at 30 June 2015 of 32 months (2014: 38 months) and constant service activity over the remaining term, the Group expects to amortise $796,000 of deferred service income during 2015 (2014: $723,000), and $1,327,000 after that time (2014: $1,568,000). The amounts recognised in respect of construction contracts will generally be utilised within the next reporting period (see Note 11.1). AASB (a)(iii) AASB (a)(v) 24 Equity 24.1 Share capital The share capital of Grant Thornton CLEARR consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders meeting of Grant Thornton CLEARR. AASB (a)(iv) Shares issued and fully paid: Shares Shares $ 000 $ 000 beginning of the year 12,000,000 12,000,000 15,050 15,050 issued under share-based payments 270,000-1,685 - share issue 1,500,000-16,680 - AASB (a)(i) Total contributed equity at 30 June 13,770,000 12,000,000 33,415 15,050 Additional shares were issued during 2015 relating to share-based payments (see Note 22.2 for details on the Group s share-based employee remuneration schemes).

79 Example unlisted public financial statements 72 The Group issued 1,500,000 shares on 30 March 2015, corresponding to 12.5% of total shares issued. Each share has the same right to receive dividend and the repayment of capital and represents one vote at the Shareholders Meeting of Grant Thornton CLEARR. AASB (a)(vii) The authorised shares that have not yet been issued have been authorised solely for use in the Group s share-based remuneration Programs (see Note 22.2) Other components of equity The details of other components of equity are as follows: AASB (d)(i) Foreign currency Revaluation AFS financial Cash flow Actuarial adjustments on translation reserve reserve assets reserve hedges reserve defined benefit plans 8 Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 AASB A Balance at 1 July 2013 (113) ,617 2,505 Other comprehensive income for the year (all attributable to the Parent): AASB (c) re-measurement of net defined benefit liability (3,541) (3,541) Cash flow hedges: AASB 7.23(c) current year gains (47) - (47) AASB 7.23(d) reclassification to profit or loss (425) - (425) AASB 7.20(a)(ii) AFS financial assets: - current year gains AASB (b) exchange differences on translating foreign operations (341) (341) AASB (b) Before tax (341) - 35 (472) (3,541) (4,319) AASB Tax benefit , Net of tax (246) - 35 (472) (2,479) (3,162) Balance at 30 June 2014 (359) (160) (862) (657) 8 The revised version of AASB 119 Employee Benefits does not mandate where to present re-measurements in Equity. Accordingly, while it is preferable to recognise re-measurements directly in retained earnings, we believe it is also acceptable to recognise such re-measurements in a separate component of equity as illustrated in this set of Example Financial Statements.

80 Example unlisted public financial statements 73 AASB (d)(i) Foreign currency Revaluation AFS financial Cash flow hedges Actuarial adjustments on translation reserve reserve assets reserve reserve Defined Benefit Plans 9 Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 AASB A Balance at 1 July 2014 (359) (160) (862) (657) Other comprehensive income for the year (all attributable to the Parent): AASB (c) Re-measurement of net defined benefit liability ,830 3,830 Cash flow hedges: AASB 7.23(c) Current year gains AASB 7.23(d) Reclassification to profit or loss AASB 7.20(a)(ii) AFS financial assets: Current year gains Reclassification to profit or loss - - (50) - - (50) AASB (f) Revaluation of land AASB (b) Exchange differences on translating foreign operations (664) (664) AASB (h) Equity accounted investments AASB (h) Reclassification to profit or loss (3) - (3) AASB (b) Before tax (664) ,830 4,161 AASB Tax benefit / (expense) 176 (91) - - (1,149) (1,064) Net of tax (488) ,681 3,097 Balance at 30 June 2015 (847) ,819 2,440 AASB Dividends Dividends paid and proposed Dividends declared during the year: $ 000 $ 000 Fully franked interim dividend ($0.25 per share) 3,000-3,000 - The tax rates applicable to the franking credits attached to the interim dividend and to be attached to the final dividend is 30% (2014: 30%). 9 The revised version of AASB 119 Employee Benefits does not mandate where to present re-measurements in Equity. Accordingly, while it is preferable to recognise re-measurements directly in retained earnings, we believe it is also acceptable to recognise such re-measurements in a separate component of equity as illustrated in this set of Example Financial Statements.

81 Example unlisted public financial statements 74 AASB (a) AASB (i) Also during 2015, the Directors proposed the payment of a dividend of $6,885,000 ($0.50 per share). As the distribution of dividends by Grant Thornton CLEARR requires approval at the shareholders meeting, no liability in this respect is recognised in the 2015 consolidated financial statements. No income tax consequences are expected to arise as a result of this transaction at the level of Grant Thornton CLEARR Franking credits Franking credits and debits for the reporting period are detailed below. AASB The amount of the franking credits available for subsequent reporting periods are: Parent $ 000 $ 000 balance at the end of the reporting period 2,450 3,523 franking credits that will arise from the payment of the amount of provision for income tax franking debits that will arise from the payment of dividends recognised as a liability at the end of the reporting period - - franking credits that will arise from the receipt of dividends recognised as receivables at the end of reporting period - - 2,858 3, Reconciliation of cash flows from operating activities Details of the reconciliation of cash flows from operating activities are listed in the following table: AASB Cash flows from operating activities $ 000 $ 000 Profit for the period 15,473 13,246 Adjustments for: depreciation, amortisation and impairment 7,942 6,826 FV gains on financial assets / derivatives (219) 373 defined benefits plan adjustment changes in fair value of investment property (310) (175) share of profit of equity accounted investments (60) (12) bad debt expense foreign exchange differences (937) (1,164) acquisition costs included in investing return on plan assets (2,445) (2,417) net interest and dividends received included in investing and financing tax expense included in investing Net changes in working capital: change in inventories 7,823 6,764 change in trade and other receivables (281) (573) change in other assets (496) 547 change in trade and other payables (2,841) (2,856) change in other employee obligations (82) 23 change in deferred tax 1, change in provisions (40) (2,825) Net cash from operating activities 25,967 20,954

82 Example unlisted public financial statements 75 AASB In 2015, the Group acquired Goodtech (see Note 31.1). The consideration transferred included a contingent payment arrangement amounting to $600,000 as of the acquisition date. The initial recognition of this liability and the subsequent unwinding of the discount of $20,000 (2014: $Nil) are non-cash transactions excluded from the statement of cash flows. 27 Auditor remuneration Auditor remuneration details are as follows: CA 300(11Ba)/(11Ca) $ $ AASB a Audit and review of financial statements Auditors of Grant Thornton CLEARR Grant Thornton Australia 220, ,000 AASB a Overseas Grant Thornton network firms 95,000 78,000 AASB b Remuneration from audit and review of financial statements 315, ,000 Other services Auditors of Grant Thornton CLEARR Grant Thornton Australia: AASB taxation compliance 25,700 24,900 Overseas Grant Thornton network firms: AASB due diligence services 73,590 85,450 Total other service remuneration 99, ,350 Total auditor s remuneration 414, ,350 AASB (g) AASB (b)(i) AASB (B)(ii) AASB (d) AASB AASB (a) AASB (b) 28 Related party transactions The Group s related parties include its associates and joint venture, key management, postemployment benefit plans for the Group s employees and others as described below. In addition, Grant Thornton CLEARR has a subordinated loan from its main shareholder, the LOM Investment Trust (see Note 12.6 for information on terms and conditions), on which interest of $200,000 (2014: $200,000) is paid. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash Transactions with associates In order to meet peak demands by its customers, the Group has some of its consulting services carried out by professionals of its associate, Equipe Consultants S.A. During 2015, Equipe Consultants S.A. provided services valued at $568,000 (2014: $590,000). The outstanding balance of $20,000 (2014: $22,000) due to Equipe Consultants S.A. is included in trade payables. AASB (e) AASB (a) 28.2 Transactions with joint ventures During 2015, Halftime Ltd provided services valued at $10,000 (2014: $3,000). There is no outstanding balance as at 30 June 2015 (2014: $Nil).

83 Example unlisted public financial statements 76 AASB (b) AASB (f) 28.3 Transactions with Key Management Personnel Key management of the Group are the Executive members of Grant Thornton CLEARR s Board of Directors and members of the Executive Council. Key Management Personnel remuneration includes the following expenses: AASB (a) Short term employee benefits: $ $ salaries including bonuses 2,320,000 2,115,000 social security costs 70,000 34,000 company car allowance 220, ,000 Total short term employee benefits 2,610,000 2,339,000 AASB (c) Long service leave 100,000 95,000 AASB (b) Total other long-term benefits 100,000 95,000 Post-employment benefits: defined benefit pension plans 312, ,000 defined contribution pension plans 25,000 12,000 Total post-employment benefits 337, ,000 AASB (d) Termination benefits 100,000 - AASB (e) Share-based payments 103, ,000 Total remuneration 3,250,000 2,920,000 AASB AASB (a) AASB (b) During 2015, certain Key Management Personnel exercised share options with total exercise price of $1,685,000 (2014: $Nil) granted in the Group s Star Program. The Group allows its employees to take up limited short-term loans to fund merchandise and other purchases through the Group s business contacts. This facility is also available to the Group s Key Management Personnel. During 2015, the Group s key management received short term loans totalling $40,000 (2014: $38,000). The outstanding balance of $1,000 (2014: $1,000) has been included in trade and other receivables. During 2015, the Group used the legal services of one Company Director and the law firm over which he exercises significant influence. The amounts billed related to this legal service amounted to $21,000 (2014: $Nil), based on normal market rates and was fully paid as of the reporting date. AASB 124.9(g) 28.4 Transactions with Defined Benefit Plan The Defined Benefit Plan is a related party. The Defined Benefit Plan does not hold shares in Grant Thornton CLEARR. The Group s only transaction with the Defined Benefit Plan relates to contributions paid to the plan (see Note 22.3). AASB (d)(i) AASB Contingent liabilities Various warranty and legal claims were brought against the Group during the year. Unless recognised as a provision (see Note 21), management considers these claims to be unjustified and the probability that they will require settlement at the Group s expense to be remote. This evaluation is consistent with external independent legal advice. AASB Further information on these contingencies is omitted so as not to seriously prejudice the Group s position in the related disputes.

84 Example unlisted public financial statements Capital commitments Capital commitments relate to items of plant and IT equipment where funds have been committed but the assets not yet received $ 000 $ 000 AASB c Property, plant and equipment 1, AASB h Investment property - - Intangible assets 97 - AASB e 1, AASB 3.B64(a-d) 31 Acquisitions and disposals 31.1 Acquisition of Goodtech Ltd On 30 September 2014, the Group acquired 100% of the equity instruments of Goodtech Ltd ( Goodtech ), a Brisbane based business, thereby obtaining control. The acquisition was made to enhance the Group s position in the on-line retail market for computer and telecommunications hardware in Australia. Goodtech is a significant business in the Group s targeted market. The details of the business combination are as follows: $ 000 AASB 3.B64(f) Fair value of consideration transferred AASB 3.B64(f)(i) Amount settled in cash 16,058 AASB (a) Fair value of contingent consideration 600 Total 16,658 AASB 3.B64(i), Recognised amounts of identifiable net assets AASB (d) Property, plant and equipment 4,622 Intangible assets 5,255 Investments accounted for using the equity method 345 Investment property 75 Total non-current assets 10,297 Inventories 8,995 Trade and other receivables 7,792 Cash and cash equivalents 567 Total current assets 17,354 Borrowings (3,478) Deferred tax liabilities (632) Total non-current assets (4,110) Provisions (1,320) Other liabilities (2,312) Trade and other payables (5,689) Total non-current liabilities (9,321) Identifiable net assets 14,220 AASB (b) Goodwill on acquisition 2,438 AASB (c), Consideration transferred settled in cash 16,058 AASB Cash and cash equivalents acquired (567) Net cash outflow on acquisition 15,491 Acquisition costs charged to expenses 223 Net cash paid relating to the acquisition 15,714 AASB 3.B64(f)(i) Consideration transferred The acquisition of Goodtech was settled in cash of $16,058,000.

85 Example unlisted public financial statements 78 AASB 3.B64(g)(i-iii) AASB 3.B67(b)(i iii) AASB 3.B64(m) AASB 3.B64(h)(i-iii) AASB 3.67 AASB AASB 3.B64(e) AASB 3.B64(q)(i-iii) AASB 3.B64(a)- (d) The purchase agreement included an additional consideration of $1,310,000, payable only if the average profits of Goodtech for 2015 and 2016 exceed a target level agreed by both parties. The additional consideration will be paid on 1 October The $600,000 fair value of the contingent consideration liability initially recognised represents the present value of the Group s probabilityweighted estimate of the cash outflow. It reflects management s estimate of a 50% probability that the targets will be achieved and is discounted using an interest rate of 4.4% 10. As at 30 June 2015, there have been no changes in the estimate of the probable cash outflow but the liability has increased to $620,000 due to the unwinding of the discount. Acquisition-related costs amounting to $223,000 are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, as part of other expenses. Identifiable net assets The fair value of the trade and other receivables acquired as part of the business combination amounted to $7,792,000, with a gross contractual amount of $7,867,000. As of the acquisition date, the Group s best estimate of the contractual cash flow not expected to be collected amounted to $75,000. Goodwill Goodwill of $2,438,000 is primarily related to growth expectations, expected future profitability, the substantial skill and expertise of Goodtech s workforce and expected cost synergies. Goodwill has been allocated to cash-generating units at 30 June The goodwill that arose from this business combination is not expected to be deductible for tax purposes. Goodtech s contribution to the Group results Goodtech incurred a loss of $20,000 for the nine months from 30 September 2014 to the reporting date, primarily due to integration costs. If Goodtech had been acquired on 1 July 2014, revenue of the Group for 2015 would have been $212 million, and profit for the year would have increased by $350, Acquisition of Good Buy Inc. On 31 December 2013, the Group acquired 100% of the equity instruments of Good Buy Inc. ( Good Buy ), a Delaware (USA) based business, thereby obtaining control. The acquisition of Good Buy was made to enhance the Group s position as an online retailer for computer and telecommunication hardware in the US market. 10 The determination of the acquisition-date fair value of the contingent consideration should consider the expected outcome of the contingency. This example illustrates one possible approach in estimating the fair value of contingent consideration.

86 Example unlisted public financial statements 79 AASB 3.B64(i) The details of the business combination are as follows: $ 000 AASB 3.B63(f) Fair value of consideration transferred: AASB 3.B63(f)(i) amount settled in cash 12,420 AASB (a/d) Recognised amounts of identifiable net assets: AASB 3.B64(i) property, plant and equipment 3,148 AASB (d) intangible assets 3,005 Total non-current assets 6,153 Inventories 5,469 Trade and other receivables 5,200 AASB (c) Cash and cash equivalents 344 Total current assets 11,013 Deferred tax liabilities (435) Non-current liabilities (435) Provisions and contingent liabilities (1,234) Other liabilities (657) Trade and other payables (4,989) Total current liabilities (6,880) Net identifiable assets and liabilities 9,851 Goodwill on acquisition 2,569 AASB (d) Consideration transferred settled in cash 12,420 AASB (c) Cash and cash equivalents acquired (344) AASB Net cash outflow on acquisition 12,076 Acquisition costs charged to expenses 76 Net cash paid relating to the acquisition 12,152 AASB 3.B64(f)(i) AASB 3.B64(m) Consideration transferred The acquisition of Good Buy was settled in cash amounting to $12,420,000. Acquisition-related costs amounting to $76,000 are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, as part of other expenses. AASB 3.B64(h)(i-iii) Identifiable net assets The fair value of the trade and other receivables acquired as part of the business combination amounted to $5,200,000, with a gross contractual amount of $5,350,000. As of the acquisition date, the Group s best estimate of the contractual cash flow not expected to be collected amounted to $150,000. AASB 3.67(e) AASB AASB 3,B64(k) Goodwill Goodwill of $2,569,000 is primarily related to the sales force and the sales know-how of key personnel of Good Buy. Goodwill has been allocated to the retail segment and is not expected to be deductible for tax purposes.

87 Example unlisted public financial statements 80 AASB 3.B64(q(iii)) Good Buy s contribution to the Group results Good Buy contributed $400,000 to the consolidated profit for the 6 months from 1 January 2014 to 30 June If Good Buy had been acquired on 1 July 2013, revenue of the Group for 2014 would have been $196 million. However, due to a lack of IFRS-specific data prior to the acquisition of Good Buy, pro-forma profit or loss of the combined Entity for the complete 2014 reporting period cannot be determined reliably Disposal of Highstreet Ltd See Note 32.3 below. AASB 12.10(a)(i) AASB Interests in subsidiaries 32.1 Composition of the Group Set out below details of the subsidiaries held directly by the Group: Name of the Subsidiary Country of incorporation and principal place of business Principal activity Goodtech Ltd Australia Online retailer of computer and telecommunications hardware Good Buy Inc. USA Online retailer of computer and telecommunications hardware Tech Squad Ltd Australia Design and sale of phone and intranet applications Data Corp United Kingdom Online sales of hardware and software products Highstreet Ltd United Kingdom Design and sale of phone and intranet applications Proportion of ownership interests held by the Group 30 June June % - 100% 100% 80% 80% 100% 100% - 100% AASB 12.9 AASB 10.B41-B46 Significant judgements and assumptions The Group holds 45% of the ordinary shares and voting rights in Equipe Consultants S.A. ( Equipe ). Two other investors each hold 15%. The remaining 25% is held by several other unrelated investors, none of whom own more than 2% individually. There are no arrangements for the other shareholders to consult one another or act collectively and past experience indicates that few of the other owners actually exercise their voting rights at all. The Group has appointed four of Equipe s Board of Directors out of a total of eleven. Management has reassessed its involvement in Equipe in accordance with AASB 10 s revised control definition and guidance. It has concluded that it has significant influence but not outright control. In making its judgement, management considered the Group s voting rights, the relative size and dispersion of the voting rights held by other shareholders and the extent of recent participation by those shareholders in General Meetings. Recent experience demonstrates that sufficient of the smaller shareholders participate such that they, along with the two (2) other main shareholders, prevent the Group from having the practical ability to direct the relevant activities of Equipe unilaterally.

88 Example unlisted public financial statements 81 AASB Subsidiary with material non-controlling interests The Group includes one subsidiary, Tech Squad Ltd, with material Non-Controlling Interests ( NCI ): Name Proportion of NCI ownership interests and voting rights Profit allocated to NCI Accumulated NCI 30 June June June June June June 2014 Tech Squad Ltd 20% 20% AASB 12.B10(a) AASB 12.12(g) AASB 12.B10(b) No dividends were paid to the NCI during the years 2015 and Summarised financial information for Tech Squad Ltd, before intragroup eliminations, is set out below: $000 $000 Current assets 3,924 3,452 Non-current assets 5,019 5,182 Total assets 8,943 8,634 Current liabilities (1,561) (2,268) Non-current liabilities (3,806) (3,402) Total liabilities (5,367) (5,670) Equity attributable to owners of the Parent 2,863 2,372 Non-controlling interests $000 $000 Revenue 7,658 7,116 Profit for the year attributable to owners of the Parent Profit for the year attributable to NCI Profit for the year Other Comprehensive Income for the year (all attributable to owners of the Parent) 6 4 Total comprehensive income for the year attributable to owners of the Parent Total comprehensive income for the year attributable to NCI Total comprehensive income for the year Net cash from operating activities Net cash used in investing activities (531) (673) Net cash from / (used in) financing activities 446 (61) Net cash inflow AASB (b) AASB (d) 32.3 Losing control over a subsidiary during the reporting period On 30 March 2015, the Group disposed of its 100% equity interest in its subsidiary, Highstreet Ltd ( Highstreet ). The subsidiary was classified as held for sale in the 2013 financial statements (see Note 9).

89 Example unlisted public financial statements 82 The consideration was received in At the date of disposal, the carrying amounts of Highstreet s net assets were as follows: $ 000 Property, plant and equipment 2,475 Total non-current assets 2,475 Inventories 1,121 AASB (c) Cash and cash equivalents - Total current assets 1,121 Provisions (232) Borrowings (8) Trade and other payables (210) Total current liabilities (450) Total net assets 3,146 AASB (a) Total consideration received in cash 3,117 Cash and cash equivalents disposed of - AASB Net cash received 3,117 AASB Loss on disposal (29) AASB 12.19(b) AASB AASB (a) The loss on disposal is included in the loss for the year from discontinued operations in the consolidated statement of profit or loss (see Note 9) Interests in unconsolidated structured entities The Group has no interests in unconsolidated structured entities. 33 Leases 33.1 Finance leases as lessee The Group s main warehouse and related facilities and certain IT equipment are held under finance lease arrangements. As of 30 June 2015 the net carrying amount of the warehouse and related facilities held under finance lease arrangements (included as part of buildings) is $3,362,000 (2014: $3,723,000); and the net carrying amount of the IT equipment held under finance lease arrangements (included as part of IT equipment) is $231,000 (2014: $480,000) (see Note 15). The Group s finance lease liabilities, which are secured by the related assets held under finance leases, are classified as follows: Current: $ 000 $ 000 finance lease liabilities Non-current: finance lease liabilities 4,060 4,459

90 Example unlisted public financial statements 83 Future minimum finance lease payments at the end of each reporting period under review were as follows: 30 June 2015 Minimum lease payments due Within 1 year 1 to 5 years After 5 years Total $ 000 $ 000 $ 000 $ 000 AASB (b) Lease payments 727 1,415 3,539 5,681 Finance charges (215) (330) (528) (1,073) Net present values 512 1,085 3,011 4, June 2014 AASB (b) Lease payments 726 1,432 4,072 6,230 Finance charges (220) (336) (560) (1,116) Net present values 506 1,096 3,512 5,114 AASB (e) The lease agreement for the main warehouse includes fixed lease payments and a purchase option at the end of the ten year lease term. The agreement is non-cancellable but does not contain any further restrictions Operating leases as lessee The Group leases an office and production building under an operating lease. The future minimum lease payments are as follows: Minimum lease payments due Within 1 year 1 to 5 years After 5 years Total $ 000 $ 000 $ 000 $ 000 AASB (a) 30 June ,211 12,567 25,678 42, June ,431 12,100 24,342 39,873 AASB (c) AASB (b) AASB (d) Lease expense during the period amount to $3,568,000 (2014: $3,398,000) representing the minimum lease payments. The rental contract has a non-cancellable term of fifteen years. The building was subject to a sale and lease back transaction in A related gain was included in other liabilities (see Note 23) and is being amortised over the remaining lease term Operating leases as lessor The Group leases out investment properties on operating leases (see Note 16 below). AASB (d)(ii) AASB 7.33 AASB 7.IG15 34 Financial instrument risk 34.1 Risk management objectives and policies The Group is exposed to various risks in relation to financial instruments. The Group s financial assets and liabilities by category are summarised in Note The main types of risks are market risk, credit risk and liquidity risk. The Group s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group s short to medium-term cash flows by minimising the exposure to financial markets. Long-term financial investments are managed to generate lasting returns.

91 Example unlisted public financial statements 84 The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below Market risk analysis The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities. AASB 7.33(a) AASB 7.33(b) AASB 7.IG15 AASB 7.33(c) Foreign currency sensitivity Most of the Group s transactions are carried out in $AUD. Exposures to currency exchange rates arise from the Group s overseas sales and purchases, which are primarily denominated in US Dollars ($USD) and Pound Sterling ( GBP). The Group also holds an investment in a $USD bond. Further, the Group has a $USD loan designated at fair value through profit or loss, which has been used to fund the purchase of investment property in the United States. To mitigate the Group s exposure to foreign currency risk, non-$aud cash flows are monitored and forward exchange contracts are entered into in accordance with the Group s risk management policies. Generally, the Group s risk management procedures distinguish short-term foreign currency cash flows (due within six months) from longer-term cash flows (due after six months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other currency transactions. The Group does not enter into forward exchange contracts to mitigate the exposure to foreign currency risk on the Group s $USD loan used to fund the purchase of US investment property. The loan is designated at fair value through profit and loss to significantly reduce measurement inconsistencies between investment properties and the related loan. The $USD fair value of the loan and the related properties are both translated into $AUD at the prevailing spot exchange rate. Accordingly foreign currency fluctuations on the investment property are largely mitigated by offsetting movements on the related loan. Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into $AUD at the closing rate: AASB 7.34(a) Short term exposure Long term exposure USD GBP Other USD GBP Other AASB 7.34(c) $ $ 000 $ $ June 2015 Financial assets 4,518 3, , Financial liabilities 710 1, Total exposure 3,808 1, , June 2014 Financial assets 2,920 1, , Financial liabilities 586 1, Total exposure 2, ,

92 Example unlisted public financial statements 85 AASB 7.40(a) AASB 7.40(b) AASB 7.IG36 The following table illustrates the sensitivity of profit and equity in regards to the Group s financial assets and financial liabilities and the $USD/$AUD exchange rate and GBP/$AUD exchange rate all other things being equal. It assumes a +/- 10% change of the $AUD/$USD exchange rate for the year ended at 30 June 2015 (2014: 10%). A +/- 5% change is considered for the $AUD/ GBP exchange rate (2014: 5%). Both of these percentages have been determined based on the average market volatility in exchange rates in the previous twelve months. The sensitivity analysis is based on the Group s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates. If the $AUD had strengthened against the $USD by 10% (2014: 10%) and GBP by 5% (2014: 5%) respectively then this would have had the following impact: Profit for the year Equity USD GBP Total USD GBP Total $ $ 000 $ $ June 2015 (97) (99) (196) (47) (99) (146) 30 June 2014 (53) (24) (77) (3) (24) (27) If the $AUD had weakened against the $USD by 10% (2014: 10%) and GBP by 5% (2014: 5%) respectively then this would have had the following impact: Profit for the year Equity USD GBP Total USD GBP Total $ $ 000 $ $ June June AASB 7.42 Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group s exposure to currency risk. AASB 7.33(a) AASB 7.33(b) AASB 7.40(a) AASB 7.40(b) AASB 7.IG36 Interest rate sensitivity The Group s policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 June 2015, the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The Group s investments in bonds all pay fixed interest rates. The exposure to interest rates for the Group s money market funds is considered immaterial. The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 1% (2014: +/- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. Profit for the year Equity $ 000 $ 000 $ 000 $ % -1% +1% -1% 30 June (36) 26 (16) 30 June (32) 23 (14)

93 Example unlisted public financial statements 86 AASB 7.33(a) AASB 7.40(a) AASB 7.40(b) AASB 7.40(b) AASB 7.33(b) AASB 7.40(a) AASB 7.40(b) AASB 7.33(a) AASB 7.36(a) Other price risk sensitivity The Group is exposed to other price risk in respect of its listed equity securities, the investment in XY Ltd and debentures (see Note 12.3). For the listed equity securities, an average volatility of 20% has been observed during 2015 (2014: 18%). This volatility figure is considered to be a suitable basis for estimating how profit or loss and equity would have been affected by changes in market risk that were reasonably possible at the reporting date. If the quoted stock price for these securities increased or decreased by that amount, Other Comprehensive Income and equity would have changed by $85,000 (2014: $62,000). The listed securities are classified as AFS, therefore no effect on profit or loss would have occurred. The Group s sensitivity to price risk in regards to its investment in XY Ltd cannot be reliably determined due to numerous uncertainties regarding the future development of this Company (see Note 12.3 for further information). The investments in listed equity securities and in XY Ltd are considered long-term, strategic investments. In accordance with the Group s policies, no specific hedging activities are undertaken in relation to these investments. The investments are continuously monitored and voting rights arising from these equity instruments are utilised in the Group s favour. The average volatility of the listed debentures was 15% in 2015 (2014: 13%). If the market price had increased or decreased by this amount, other comprehensive income and equity would have increased/decreased by $15,000 (2014: $15,000). As none of the debentures classified as AFS were sold during any of the periods under review, no effect on profit or loss would have occurred (unless any decline in fair value to below cost is considered to result from impairment of the asset) Credit risk analysis Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits, investment in bonds etc. The Group s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: AASB 7.34(a) Classes of financial assets $ 000 $ 000 Carrying amounts: bonds 2,814 2,992 listed debentures money market funds derivative financial instruments cash and cash equivalents 34,729 11,197 trade and other receivables 30,945 23,441 70,243 38,946 AASB 7.33(b) The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group s policy is to deal only with creditworthy counterparties.

94 Example unlisted public financial statements 87 AASB 7.36(c) AASB 7.37(a) AASB 7.IG28 The Group s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. Some of the unimpaired trade receivables are past due as at the reporting date. Information on financial assets past due but not impaired are as follows: $ 000 $ 000 Not more 3 months More than 3 months but not more than 6 months More than 6 months but not more than 1 year More than 1 year 2 1 Total AASB 7.36(c) AASB 7.IG23 AASB 7.36(c) AASB 7.36(a) AASB 7.36(c) AASB 7.IG23(a) AASB 7.20(e) AASB 7.33(a) AASB 7.33(b) AASB 7.39(c) AASB 7.39(c) AASB 7.B11F AASB 7.B11E In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good. The credit risk for cash and cash equivalents, money market funds, debentures and derivate financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. No impairment loss has been recorded in relation to the bonds (HTM investments, see Note 12.2) which have been graded AA by Standard & Poors and bonds are not past due. The carrying amounts disclosed above are the Group s maximum possible credit risk exposure in relation to these instruments Liquidity risk analysis Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period. The Group s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets. The Group considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Group s existing cash resources and trade receivables (see Note 12) significantly exceed the current cash outflow requirements. Cash flows from trade and other receivables are all contractually due within six (6) months.

95 Example unlisted public financial statements 88 As at 30 June 2015, the Group s non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: 30 June 2015 Current Non-current AASB 7.B11 Within 6 months 6-12 months 1-5 years 5+ years AASB 7.39(a) $ 000 $ 000 $ 000 $ 000 US-Dollar loans ,761 8,215 Other bank borrowings 4, Non-convertible bond ,888 - Finance lease obligations ,415 3,539 Trade and other payables 8, Total 13, ,064 11,754 This compares to the maturity of the Group s non-derivative financial liabilities in the previous reporting periods as follows: AASB 7.39(a) 30 June 2014 Current Non-current AASB 7.B months 6-12 months 1-5 years 5+ years $ 000 $ 000 $ 000 $ 000 US-Dollar loans ,781 8,508 Other bank borrowings 3, Non-convertible bond ,303 - Finance lease obligations ,432 4,072 Trade and other payables 6, Total 10, ,516 12,580 The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. The subordinated shareholder loan amounting to $5,000,000 throughout all reporting periods is not included as this is only repayable upon liquidation of Grant Thornton CLEARR. Annual interest payments amount to $200,000. In assessing and managing liquidity risks of its derivative financial instruments, the Group considers both contractual inflows and outflows. As at 30 June 2015, the contractual cash flows of the Group s derivative financial assets and liabilities are as follows: AASB 7.39(b) 30 June 2015 Current AASB 7.B11 1 to 6 months 6 to 12 months $ 000 $ 000 Gross settled forward contracts: cash outflow (212) (6,978) cash inflow 300 7,509 Total

96 Example unlisted public financial statements 89 AASB 7.34(a) This compares to the contractual cash flows of the Group s derivative financial assets and liabilities in the previous reporting periods as follows: AASB 7.39(b) 30 June 2014 Current AASB 7.B11 1 to 6 months 6 to 12 months $ 000 $ 000 Gross settled forward contracts: cash outflow (190) (7,100) cash inflow 203 7,050 Total 13 (50) Derivative financial instruments reflect forward exchange contracts (see Note 12.4) that will be settled on a gross basis. 35 Fair value measurement 35.1 Fair value measurement of financial instruments Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three (3) levels of a fair value hierarchy. The three (3) levels are defined based on the observability of significant inputs to the measurement, as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 30 June 2015 and 30 June 2014: AASB 13.93(a)-(b) 30 June 2015 Level 1 Level 2 Level 3 Total AASB $ 000 $ 000 $ 000 $ 000 Financial assets Listed securities and debentures Money market funds US-Dollar forward contracts: cash flow hedge Other forward exchange contracts: held-for-trading Total assets 1, ,755 Financial liabilities US-Dollar loans - (7,950) - (7,950) Contingent consideration - - (620) (620) Total liabilities - (7,950) (620) (8,570) Net fair value 1,173 (7,368) (620) (6,815)

97 Example unlisted public financial statements 90 AASB 13.93(a)-(b) 30 June 2014 Level 1 Level 2 Level 3 Total AASB $ 000 $ 000 $ 000 $ 000 Financial assets Listed securities and debentures Money market funds US-Dollar forward contracts: cash flow hedge Other forward exchange contracts: held-for-trading 1, ,316 Total assets Financial liabilities US-Dollar loans - (160) - (160) Contingent consideration - (8,220) - (8,220) Total liabilities - (8,380) - (8,380) Net fair value 1,104 (8,168) - (7,064) AASB 13.93(c) There were no transfers between Level 1 and Level 2 in 2015 or AASB 13.93(d) AASB 13.93(g) Measurement of fair value of financial instruments The Group s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The finance team reports directly to the Chief Financial Officer ( CFO ) and to the Audit Committee. Valuation processes and fair value changes are discussed among the Audit Committee and the valuation team at least every year, in line with the Group s reporting dates. The valuation techniques used for instruments categorised in Levels 2 and 3 are described below: Foreign currency forward contracts (Level 2) The Group s foreign currency forward contracts are not traded in active markets. These have been fair valued using observable forward exchange rates and interest rates corresponding to the maturity of the contract. The effects of non-observable inputs are not significant for foreign currency forward contracts. US-Dollar loans (Level 2) The fair values of the US-Dollar loans are estimated using a discounted cash flow approach, which discounts the contractual cash flows using discount rates derived from observable market interest rates of similar loans with similar risk. The interest rate used for this calculation is 3.9%. AASB 13.93(d) AASB 13.93(h) Contingent consideration (Level 3) The fair value of contingent consideration related to the acquisition of Goodtech (see Note 31.1) is estimated using a present value technique. The $620,000 fair value is estimated by probabilityweighting the estimated future cash outflows, adjusting for risk and discounting at 4.4%. The probability-weighted cash outflows before discounting are $655,000 and reflect the management s estimate of a 50% probability that the contract s target level will be achieved. The discount rate used is 4.4%, based on the Group s estimated incremental borrowing rate for unsecured liabilities at the reporting date, and therefore reflects the Group s credit position. The effects on the fair value of risk and uncertainty in the future cash flows are dealt with by adjusting the estimated cash flows rather than adjusting the discount rate.

98 Example unlisted public financial statements 91 The following table provides information about the sensitivity of the fair value measurement to changes in the most significant inputs: Significant unobservable input Estimate of the input Sensitivity of the fair value measurement to input Probability of meeting target 50% An increase to 60% (decrease to 40%) would increase / (decrease) fair value by $125,000. Level 3 fair value measurements The reconciliation of the carrying amounts of financial instruments classified within Level 3 is as follows: Contingent consideration $ 000 $ 000 AASB 13.93(e) Balance at 1 July AASB 13.93(e)(iii) Acquired through business combination (600) - AASB 13.93(e)(i) Losses recognised in profit or loss under: (20) - Finance costs Balance at 30 June 2015 (620) - AASB 13.93(f) Total amount included in profit or loss for unrealised losses on Level 3 instruments under finance costs (20) - AASB Financial instruments measured at amortised cost for which the fair value is disclosed See Notes 12.2 and Fair value measurement of non-financial assets The following table shows the Levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 30 June 2015: AASB 13.93(a)-(b) 30 June 2015 Level 1 Level 2 Level 3 Total AASB $ 000 $ 000 $ 000 $ 000 Property, plant and equipment: land held for production in Australia - - 7,979 7,979 Goodtech land Investment property: office building in Australia - - 4,552 4,552 Goodtech investment property office building in the US - - 8,035 8,035 AASB 13.93(d) AASB (e) Fair value of the Group s main property assets is estimated based on appraisals performed by independent, professionally-qualified property valuers. The significant inputs and assumptions are developed in close consultation with management. The valuation processes and fair value changes are reviewed by the Board of Directors and Audit Committee at each reporting date. Further information is set out below.

99 Example unlisted public financial statements 92 AASB 13.93(d) AASB 13.93(g) AASB (a) AASB (b) AASB 13.93(h) AASB 13.93(d) Land held for production in Australia (Level 3) The appraisal was carried out using a market approach that reflects observed prices for recent market transactions for similar properties and incorporates adjustments for factors specific to the land in question, including plot size, location, encumbrances and current use. In 2015, a negative adjustment of 7.5% was incorporated for these factors. The land was re-valued on 23 May The land was previously re-valued in May The significant unobservable input is the adjustment for factors specific to the land in question. The extent and direction of this adjustment depends on the number and characteristics of the observable market transactions in similar properties that are used as the starting point for valuation. Although this input is a subjective judgement, management considers that the overall valuation would not be materially affected by reasonably possible alternative assumptions. Land with a fair value of $730,000, recognised upon the acquisition of Goodtech in March 2015 (see Note 31.1), was not re-valued at the reporting date. Management determined that the effect of changes in fair values between the acquisition and reporting date is immaterial. AASB 13.93(d) AASB 13.93(h) Office buildings in Australia and the US (Level 3) The fair values of the office buildings are estimated using an income approach which capitalises the estimated rental income stream, net of projected operating costs, using a discount rate derived from market yields implied by recent transactions in similar properties. When actual rent differs materially from the estimated rents, adjustments have been made to the estimated rental value. The estimated rental stream takes into account current occupancy level, estimates of future vacancy levels, the terms of in-place leases and expectations for rentals from future leases over the remaining economic life of the buildings. The office buildings are re-valued annually on 30 June. The most significant inputs, all of which are unobservable, are the estimated rental value, assumptions about vacancy levels, and the discount rate. The estimated fair value increases if the estimated rental increases, vacancy levels decline or if discount rate (market yields) decline. The overall valuations are sensitive to all three assumptions. Management considers the range of reasonably possible alternative assumptions is greatest for rental values and vacancy levels and that there is also an interrelationship between these inputs. The inputs used in the valuations at 30 June 2015 were: Australia United States Rental value AUD$108/sqm USD$65/sqm Vacancy levels 9.0% 11.0% Discount rate (market yield) 4.4% 3.7% AASB 13.93(h) An investment property with a fair value of $75,000, recognised upon the acquisition of Goodtech (see Note 31.1) in March 2015, was not re-valued at the reporting date. Management determined that the effect of changes in fair values between the acquisition and reporting date is immaterial.

100 Example unlisted public financial statements 93 The reconciliation of the carrying amounts of non-financial assets classified within Level 3 is as follows: PP&E Investment properties Land held for production Australia US $ 000 $ 000 $ 000 AASB 13.93(e) Balance at 1 July ,697 4,366 7,911 AASB 13.93(e)(i) Gains recognised in profit or loss AASB 13.93(e)(ii) Increase in fair value of investment property Gains recognised in other comprehensive income: revaluation of land exchange differences on translating foreign operations (21) - - AASB 13.93(e)(iii) acquired in business combination AASB 13.93(f) Balance at 30 June ,709 4,627 8,035 Total amount included in profit or loss for unrealised gains on Level 3 assets AASB Capital management policies and procedures The Group s capital management objectives are: to ensure the Group s ability to continue as a going concern to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk AASB (a)(i) AASB (a)(ii) AASB (a)(iii) The Group monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised in other comprehensive income. The Group s goal in capital management is to maintain a capital-to-overall financing ratio of 1:6 to 1:4. This is in line with the Group s covenants resulting from the subordinated loan it has taken out from its main shareholder in Management assesses the Group s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Group s various classes of debt. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

101 Example unlisted public financial statements 94 The amounts managed as capital by the Group for the reporting periods under review are summarised as follows: AASB (b) $ 000 $ 000 Total equity 88,242 54,009 Subordinated loan 5,000 5,000 Cash flow hedges (469) 160 Cash and cash equivalents (34,729) (11,197) Capital 58,004 47,972 Total equity 88,242 54,009 Borrowings 25,815 24,644 Overall financing 114,057 78,653 Capital-to-overall financing ratio AASB (d) The Group has honoured its covenant obligations, including maintaining capital ratios, since the subordinated loan was taken out in The ratio reduction during 2015 is primarily a result of financing the acquisition of Goodtech (see Note 31.1). 37 Parent Entity information Information relating to Grant Thornton CLEARR ( the Parent Entity ): Statement of financial position $ 000 $ 000 Current assets 56,816 40,220 Total assets 96,751 96,153 Current liabilities 5,942 11,784 Total liabilities 41,355 54,015 Net assets 55,396 42,138 Issued capital 13,770 12,000 Retained earnings 40,480 29,314 Asset revaluation reserve Available for sale reserve Cash flow hedge reserve Total equity 55,396 42,138 Statement of profit or loss and other comprehensive income Profit for the year 11,166 9,457 Other comprehensive income Total comprehensive income 11,488 9,715 The Parent Entity has capital commitments of $1.1m to purchase plant and IT equipment (2014: $Nil). Refer to Note 30 for further details of the commitment. The Parent Entity has not entered into a deed of cross guarantee nor are there any contingent liabilities at the year end. 38 Post-reporting date events No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

102 Example unlisted public financial statements 95 Directors Declaration CA 295(4) 1 In the opinion of the Directors of Grant Thornton CLEARR Example Ltd: a The consolidated financial statements and notes of Grant Thornton CLEARR Example Ltd are in accordance with the Corporations Act 2001, including: CA 295(4)(d)(ii) CA 295(4)(d)(i) i ii Giving a true and fair view of its financial position as at 30 June 2015 and of its performance for the financial year ended on that date; and Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and CA 295(4)(c) b There are reasonable grounds to believe that Grant Thornton CLEARR Example Ltd will be able to pay its debts as and when they become due and payable. CA 295(4)(ca) CA 295(5)(a) 2 The consolidated financial statements comply with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors: CA 295(5)(c) Director Blake Smith CA 295(5)(b) Dated the 28 th day of August 2015

103 Example unlisted public financial statements 96 Independent Auditor s Report An independent auditor s report will be prepared by the entity s auditor in accordance with Australian Auditing Standards. This publication does not include an illustrative report as the wording of the report may differ between entities.

104 The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one is entitled to rely on this information and no one should act on such information without appropriate professional advice obtained after a thorough examination of the particular situation. Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another s acts or omissions. In the Australian context only, the use of the term Grant Thornton may refer to Grant Thornton Australia Limited ABN and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.